PPF Account Limit: Deposit, Age, Loan, Investment and Withdrawals
Limits on Public Provident Fund (PPF)
A Public Provident Fund is a long-term investment scheme launched by the government of India. It comes under the Public Provident Fund Act of 1968.
A few of the major reasons for the attractiveness of the PPF scheme are safety, attractive interest rates, tax benefits and returns being fully exempted from tax.
It has a lock-in period of 15 years, meaning that you can only withdraw your funds after the maturity date. You can extend the tenure by blocks of five years.
To open a PPF account, you will need to visit a bank or post office. But for that, you must be aware of PPF limits or PPF limitations, which we are going to talk about in this blog.
In this article, we will cover:
- PPF eligibility limit
- Deposit limit for the PPF scheme
- Frequency of contributions
- The withdrawal limit for the PPF scheme
- How much amount can you withdraw?
- PPF loan limit
- PPF age limit
PPF eligibility limit
Only those people who are residents of India are eligible to open their PPF accounts. And only resident Indians can extend their tenure limits of the account.
For NRIs, only those non-residents can continue to invest in the scheme if they opened their accounts while they were residents of India.
One person or individual can activate only one account under their name. Also, joint PPF accounts are not allowed.
HUFs and NRIs are not eligible for the scheme.
Deposit limit for the PPF scheme
First of all, you must know that you have to contribute money towards the PPF account every financial year to keep your account active.
The minimum amount you can invest in a PPF scheme in a year is ₹500, and the maximum you can invest is ₹1.5 lakhs.
It means to keep your account active, you have to put at least ₹500 in your account in one year. You can open your account with a small contribution of ₹100, but you will need to keep adding your funds to ₹500.
You can only invest or save up to ₹1.5 lakhs in a PPF account in a financial year (from April to March). For example, you invested ₹50,000 in April, ₹30,000 in October and ₹20,000 in November. Now, for the rest of the financial year, the maximum you can invest is ₹50,000.
Frequency of contributions
Earlier, the government of India allowed only 12 deposits per year. This means after depositing money 12 times, you could not invest money further into your account. However, after 2019, the restriction was abolished. Now, there are no restrictions on the number of times you can deposit money into your PPF accounts.
The withdrawal limit for the PPF scheme
Public Provident Fund is a long-term scheme, i.e. for 15 years. You can fully withdraw your saved/invested amounts only after a lock-in period of 15 years. However, there are certain relaxations on the same.
Suppose you are in urgent need of funds and wish to withdraw your money. Then the government allows you to make partial redemptions before 15 years. You can make partial withdrawals after completing 6 years i.e from the 7th year of investment.
For example, you opened your PPF account and started investing on 1 April 2011. Then you can make partial withdrawals from the financial year 2018-19.
However, you must note that the government has allowed only one partial withdrawal each financial year.
How much amount can you withdraw?
There's a limit to how much you can withdraw each year. It should be the lesser of the following amounts:
- 50% of the balance of the account at the end of the FY, preceding the current FY, or
- 50% of the PPF account's balance at the end of the 4th FY, preceding the current FY.
A Form 3 or Form C has to be filled and submitted for partial withdrawal from the PPF account.
PPF loan limit
You must have read that you can take loans against your PPF accounts. The loan facility is available only after the 3rd FY and can only be taken till the end of the 6th FY.
For example, you opened your PPF account on 1 April 2011, i.e. FY 2011-12. The loan facility can be availed from FY 2013-14, i.e. from 1 April 2013.
Amount: You can take a loan against one-fourth, i.e. 25% of the PPF account balance at the 2nd FY end preceding the year in which the loan was applied.
Repayment tenure: The repayment tenure of a loan against the PPF account balance is a maximum of 36 months.
Interest rates: The interest rate for a PPF loan will be 1% higher than what the government has set. In case of default on repayment of the loan, the interest rates would increase from 1% to 6% more than prevailing rates.
Second loan: A second loan against a PPF account can only be availed after repaying the first one.
PPF age limit
Persons of any age can open their PPF accounts. For minors, their parents can open their PPF accounts. However, there are certain limitations to the same.
One parent can only activate one account for one minor child. The total contribution towards one's account and minor's account should not exceed Rs 1.5 lakhs in a year. For example, you deposited Rs 1,00,000 in your PPF account. Now, you can only invest Rs 50,000 in your minor's account during that financial year.
Similarly, your spouse and your daughter can open their PPF accounts with a combined limit of Rs. 1.5 lakhs.
The Public Provident Fund scheme is an initiative taken by the government of India to encourage investments among Indians.
It is risk-free, comes with attractive returns, helps in tax saving and the returns are fully tax exempted.
However, there are certain pointers and PPF limitations you must know before opening an account which we discussed in the above paragraphs.
You are not eligible for the scheme if you are a HUF or an NRI. Also, for opening an account for a minor, a parent's account and a minor's account have a combined limit of investing ₹1.5 lakh a year.