Public provident funds provide the benefit of availing loans against the investment amount. However, the loan will only be granted if it is taken at any time from the beginning of 3rd year till the end of the 6th year from the date of activation of account.
The maximum tenure of such loans against PPF is 36 months. Only 25% or less of the total amount available in the account can be claimed for this purpose.
The interest payable on public provident fund scheme is determined by the Central Government of India. It aims to provide higher interest than regular accounts maintained by various commercial banks in the country.
Interest rates currently payable on such accounts stands at 7.1% and is subject to quarterly updates at the discretion of the government.

Tax Benefits
Income tax exemptions are applicable on the principal amount invested in a PPF account. The entire value of investment can be claimed for tax waiver under section 80C of the Income Tax Act of 1961. However, it should be kept in mind that the total principal that can be invested in one financial year cannot exceed Rs.1,50,000.

The total interest accrued on PPF investment is also exempt from any tax calculations.

Therefore, the entire amount redeemed from a PPF account upon completion of maturity is not subject to taxation. This policy makes the public provident fund scheme attractive to many investors in India.

The formula used for calculating PPF
F = P [({(1+i) ^n}-1)/i]
i = Rate of interest
F = Maturity of PPF
n = Total number of years
P = Annual instalments

Eligibility Criteria
Indian citizens residing in the country are eligible to open a PPF account in their name. Minors are also allowed to have a Public provident fund account in their name, provided it is operated by their parent/guardian.

Non-residential Indians are not permitted to open a new PPF account. However, any existing account in their name remains active till the completion of tenure. These accounts cannot be extended for five years – a benefit available to Indian residents.

How to Open a PPF Account
Both offline and online procedures are available for an individual provided they meets requisite parameters mentioned in the eligibility criteria. Activating PPF online can be done by visiting the portal of a chosen bank or post office.

The following documents have to be produced at the time of activation of a public provident fund account –
KYC documents verifying the identity of an individual, such as Aadhaar, Voter ID, Driver’s License, etc.

PAN card.

Residential address proof.

Form for nominee declaration.

Passport sized photograph.

Withdrawal
There are multiple clauses that an individual must adhere to in case they wants to withdraw funds from the PPF account.

Mandatory lock-in of 15 years is imposed on the principal amount invested in such plans. In case of emergencies related to specific end-uses, partial withdrawal can be made. However, this amount can only be extracted after the completion of 5 years of activation of the account. Up to 50% of the total balance can be withdrawn in one transaction each financial year succeeding in the 4th year.

Investors should note that funds invested in a PPF account cannot be liquidated before the completion of the maturity period. Individuals looking for long-term risk-free investment options providing stable yields can easily opt for this government-backed instrument.

Forms related to PPF