One of the best risk-free investment options in India is the Public Provident Fund (PPF). PPF is a government-backed investment scheme where you can invest anywhere from Rs. 500 to Rs. 1.5 lakhs in a financial year. The scheme comes with a mandatory lock-in period of 15 years, with a partial withdrawal facility made available after 7 years from the date of opening a PPF account.
Since the scheme is backed by the government of India, it carries zero risk of default. Also, the rate of interest for PPF is revised quarterly and is usually higher than other traditional investment options. Currently, the PPF interest rate for Q4 (2022-2023) is 7.1% per annum.
A major advantage that Public Provident Fund has over other investment options is that the contribution that you make during a financial year can be claimed as a deduction under section 80C of the Income Tax Act of 1961. Doing so allows you to reduce your income tax liability significantly. The maximum amount that you can claim as a deduction in a year is capped at Rs. 1.5 lakhs.
Wish to invest in the Public Provident Fund? Here’s a comprehensive guide on how to open a PPF account in your name.
Documents Required For a PPF Account
Before we take a look at the process that you need to follow to open a PPF account, let’s quickly go through the list of documents that you will have to submit as part of the application process.
- A duly filled and signed Form A, which is the PPF account opening form
- A duly filled and signed nomination form
- Latest passport size photograph
- A copy of your PAN or Form 60/Form 61
- A self-attested copy of your ID proof - Aadhaar, Driving License, Passport, or Voter ID
- A self-attested copy of your address proof - Aadhaar, Driving License, Passport, or Voter ID
In addition to the list above, you may also be asked to submit a few other documents depending on the institution where you choose to open a PPF account. Also, it is advisable to carry original documents along with copies of the same for verification purposes.
How to Open a PPF Account?
Now that you’ve gotten an idea of the list of documents required for a PPF account, let’s take a look at the step-by-step process that you would have to follow to open one. There are two different ways through which you can open a PPF account - online and offline.
How to Open a PPF Account Online?
Some banking institutions allow you to open a PPF account online through their internet banking portal. In this case, here’s what you would have to do.
- Step 1: Log into your bank’s internet banking portal.
- Step 2: Navigate to the ‘Public Provident Fund’ section.
- Step 3: Fill out the PPF account opening application form and the nomination form.
- Step 4: Attach scanned copies of all of the documents required for a PPF account.
- Step 5: Submit the form along with the attached documents.
That’s it. The bank will verify your application and, if found to be satisfactory, will open the PPF account in a few days. Once the account is opened, you should receive a confirmation via SMS and email. You can then proceed to transfer funds to your newly opened PPF account from your savings bank account.
How to Open a PPF Account Offline?
If you’re planning to open a PPF account via a Post Office branch or a banking institution that doesn’t support opening an account through online mode, here’s what you would have to do.
- Step 1: Visit a post office branch or a bank branch near you.
- Step 2: Request Form A, which is the PPF account opening form.
- Step 3: Fill up the entire form, making sure to not leave any mandatory field.
- Step 4: Attach the self-attested copies of all of the documents required for a PPF account.
- Step 5: Submit Form A along with the attached documents at the branch counter, along with the amount that you wish to invest. Initially, you can invest only between Rs. 500 and Rs. 70,000 at the time of opening the account. However, once the account is opened, you can invest up to the maximum limit, which is Rs. 1.5 lakhs.
Once the application is processed, your PPF account will be opened, and you will be provided with a passbook containing details of the account and the amount invested in it.
Conclusion
Now that you know how to open a PPF account, go ahead and initiate the process today. Investing in a Public Provident Fund is a great way to diversify your portfolio and is the perfect risk-free long-term investment. You can take help from PPF calculator to see how much your investment will grow over time with certain rate of interest and investment amount.
That said, if you’re looking for investment options that offer higher returns, you can consider investing in the stock market. But before you do that, make sure to first open a Demat accountin your name. You can open a 2-in-1 trading and demat account within a few minutes by simply filling out and submitting an online application on the Motilal Oswal website. Once your account is opened, you can invest not only in stocks but mutual funds and upcoming IPOs too.