When to deposit money in PPF account

Published on Sep 17 2013 // Headlines, News In Picture 22,100 views

Deposit Money in PPF

PPF Interest 8.7% w.e.f 01.04.2013

PPF Introduction

The Public Provident Fund scheme is a statutory scheme of the Central Government framed under the provisions of the Public Provident Fund Act, 1968. An individual can open a Public Provident Fund Account in his own name. He can also open an additional account on behalf of a minor of whom he is guardian. S/He can subscribe any amount in multiples of Rs. 5/- of not less than Rs.500/- and not more than Rs.1,00,000/- in a year in each of his account. A year for the purpose of the Scheme means a financial year (1st April to 31st March). The deposits in excess of Rs. 1,00,000 made during a year will not carry any interest and will not be eligible for rebate.

An individual can open only one account in his/her name either in Post office or in Bank. If two accounts are opened by the subscriber in his/her name by mistake, the second account will be treated as irregular and will not carry interest. The subscriptions can be deposited in lumpsum or in convenient installment of not more than 12 installments. It is not necessary to deposit subscription in every month of the year. The amount of subscription can also be varied to suit the convenience of the subscriber.

Note: The PPF account cannot be opened in the joint names.

When To Deposit Money into PPF

Deposit money into PPF account is something every individual should know. Why it is necessary to deposit money during the start of the month before the 5th day is due to the interest calculations.

As per the PPF rule, “Interest is calculated on lowest balances in account between 5th & last day of the month.” and is calculated on a month to month basis.

If you are a salaried individual, most of the payroll deposits are done by the end of month. So, if a partial deposit is made to PPF account before the 5th of the month, you are gaining a 2-5% increase in the net amount.

If deposit is made after the 5th of Month, the new balance amount is used to calculate the interest for the next month. So you are losing interest money for that month.

If the above practice is followed for the next 15 years (term of PPF account), you are gaining around 8-12% more on the total deposits made.

PPF statement entry

At the end of the year, the branch will prepare two scrolls-“Interest credit scroll” for the interest amount credited to the individual A/c and “Interest debit scroll” for the total amount credited to show a “Nil” effect and send to the link branch.

Even discontinued accounts earn interest.On the death of the subscriber, the balance in the PPF account does not cease to earn interest. Interest is admissible till the end of the month preceding the month on which payment of deposit is made.

Types of Forms and their purpose

  • Form-A : Account opening form.
  • Form-B : PPF Challan
  • Form-C : Application for withdrawal
  • Form-D : Application for loan
  • Form-E : Nomination
  • Form-F : Cancellation or variation of nomination
  • Form-G : Application for withdrawal by nominee / legal heirs.