Friday, November 18, 2011

Know all about the PPF Account Scheme- investment (Public Provident Fund Scheme)- the most beneficial investment in India.


THE PUBLIC PROVIDENT FUND SCHEME,  1968


[Issued vide  Government of India, MOF (DEA) Notification No. GSR 1136 dated
15.6.1968 and further amended from time to time]
GSR 1136;-  In exercise  of the power   conferred by Section 3 of  the Public
Provident Fund Act, 1968 (23 of 1968), the Central Government  hereby makes
the following scheme, namely:-
1.  Short title and commencement:- (1)  This scheme may be called the
Public Provident Fund Scheme, 1968.
(2) It shall come into force  on Ist July, 1968.
2.  Definitions:- In this scheme, unless  the context otherwise requires:-
(a)  ‘Account’   means a Public Provident Fund Account under this scheme.
(b)  ‘Accounts Office’   means  an  office    or  branch    of  the  State  Bank  of  India,        
may subsidiary bank of the State Bank of India  (excluding  a  pay office, a
sub pay office  or any other office managed by single officer or clerk) and
any other  office authorized by the Central Government to receive
subscriptions under the scheme;
( c) ‘Accounts  Officer’     means    the  person    who    for  the  time    being    is  in
charge  of an Accounts Office.
(d) ‘Act’ means    the Public Provident Fund  Act, 1968 (23 of 1968)
(e)  ‘Form’   means   a form appended to this scheme;
(ee) ‘Guardian’ in relation to a minor, means:-‘
(i) Father or mother and
(ii) Where neither parent is alive, or where the only living parent is
incapable of acting, a person entitled under the law for the time being
in force to have care of the property of minor;
(f) ‘Year’  means  the financial  year  (Ist April to 31
st
 March)
3.  Limit of subscription:- (1)  Any individual may, on his own behalf or  on
behalf of a minor  of whom he is the guardian, subscribe to the Public Provident
Fund (thereafter referred to as the fund) any  amount not less than  Rs. 500
and not more than Rs. 70,000 in a year.
     (2)  Notwithstanding  anything  contained in sub-paragraph (1), an individual
may also subscribe to the fund  on behalf of:-
(a) a Hindu Undivided Family, or
(b) an association of persons or a body of individuals consisting in either
case, only of husband and wife   governed by  the  system   of    community
of property  in force in the State  of Goa  and the Union territories of
Dadra  and Nagar Haveli and daman  and Diu, by whom or on whose
behalf money  is deposited in an account  and the deposit means money
is deposited. Out of  the income  of the Hindu Undivided  Family or an association of
persons or body of individuals, as the case may be , any amount not less
than Rs. 500 and not more than  Rs. 70,000 in a year.
    Non Resident Indians are not  eligible to open an account  under the
Public Provident Fund Scheme:-
        Provided that if a resident who subsequently becomes Non Resident Indian
during the currency  of the maturity period prescribed under Public Provident
Fund Scheme, may continue  to subscribe to the Fund  till its maturity on a Non
Repatriation Basis.
      [MOF (DEA) Notification No GSR 585 (E) dated 25.7.2003]
   4.    Manner  of  making  the  subscription:- (1)  Every individual desirous of
subscribing to Fund under the Scheme for the first time either on his own behalf
or on behalf of a minor of whom he is  the  guardian  or  on  behalf  of  a  Hindu
Undivided Family of which he is a member or on behalf of an Association of
persons or a Body of individuals as referred to in sub rule 2(b) of Rule 3 above
shall apply to the Accounts Office in Form A, or as near thereto as possible
together  with the amount of initial subscription which shall be integral multiples
of Rs.5
      (2)  On receipt of an application  under sub-paragraph(1), the Accounts
Office  shall open  an account  in the name of  the subscriber and issue a pass
book to him, wherein all amount  of deposits, withdrawals, loans and repayment
thereof together  with interest due  shall be entered  over  the signature of the
Accounts Officer with the date stamp.
      (3)  The subscriber shall deposit  his subscription  with the Account Office
with challan in Form B,  or  as  near  thereto    s  possible.  The counterfoil of the
challan  shall be returned  to the depositor by the Account Office, duly  evidence
by receipt.  In the case of deposits made by  cheques  or draft or pay order, the
Accounts Office, may issue  a paper token to the depositor pending  realization
of the proceeds.
     (4)  Every subscription shall be made in cash or by crossed cheques or  draft
or pay  order din favour of the Accounts Officer at the place at which that office
is situated.
   
5.  Number  of subscription:   The subscription, which  shall be in multiples of
Rs. 5 may,  for any year, be paid into the account in  one  lump sum or
installments not exceeding twelve in a year.
6.    Transfer  of  Account:-    A subscriber  may apply  for transfer  of his
account  from one “Account  Office” to another “Account Office”.
7.  Issue of duplicate  pass book, etc.:-  (1) In the event  of loss or
destruction of a pass book issued  by  an Accounts Office, the Accounts Office
may, on an application made to it in this  behalf, and on payment  of rupee one
by the subscriber, issue  a duplicate thereof to him.
(2) Condonation of default:-   A subscriber who fails to subscribe in any year
according to the limits specified in paragraph 3, may approach the Accounts Office for condonation of the default, on payment , for each year of default , a
fee of Rs. 50 alongwith  arrear subscription of Rs. 500 for each year.
 8. Interest -   Interest at the rate , notified by the Central Government in
official gazette from time to time, shall be allowed for calendar month on the
lowest balance at credit  of an account  between the close of the fifth day and
the end of the month and shall be credited to the account  at the end of each
year.
     Provided that where the interest to  be credited contains  a part of a rupee.
Then, if such part is fifty paise or more, it shall be increased to one complete
rupee, and if  such part is less than fifty paise, it shall be ignored.
    9. Withdrawals from the  Fund:-    (1)  Any  time    after  the  expiry  of    five
years from the end of the year in which  the initial subscription was  made , a
subscriber may, if he so desires, apply in Form C or as near thereto as possible,
together with  his pass book to the Accounts Office withdrawing  from the
balance  to his credit, an amount  not exceeding  fifty per cent  of the  amount
that stood to his credit at the end  of the forth year immediately preceding the
year of withdrawal or at the end of preceding year, whichever  is lower, less the
amount  of loan, if any, drawn by him under paragraph 10 and which remains to
be repaid:
  Provided that not more than one withdrawal shall be permissible during any
one year.
    (2)  On receipt  of an application under sub paragraph (1) the Accounts Office
may, after satisfying  itself that the amount  of withdrawal applied for is not in
excess of the limit prescribed in sub-paragraph (1) and that  the applicant has,
till the date  of application,  been subscribing according  to the limit specified in
paragraph 3, subject to the provisions of sub-paragraph (4)  permit the
withdrawal and  enter the amount  withdrawn in the pass book.
    (3) Closure of account or continuation of account without deposits
after maturity:-   Notwithstanding the provisions of sub-paragraph (1),  any
time after the expiry of 15 years from the  end of the year in which the  initial
subscription was made by him, a subscriber  may, if   he  so desires, apply in
Form C or as ‘near thereto as possible together with his pass book to the
Accounts Office for the withdrawal    of  the  entire    balance standing to his credit
and the Accounts Office, on receipt of such an application  from the subscriber,
shall  subject to the provisions of sub-paragraph (4) allow the withdrawal of the
entire balance (together  with interest  up  to    the  last  day  of  the  month
preceding the month in which the application for withdrawals made) after
making adjustments, if any,  in  respect  of  any  interest due from  the subscriber
on loans taken by him and close  his account.
 Provided  that a subscriber  may, if he so desires, make  withdrawal of the
amount  standing  to his credit, from  time to time, in installments not exceeding
one in a year.
(3A)  Continuation of account  with deposits after maturity :-  Subject  to
the provisions of sub-paragraph (3) a subscriber may, on the expiry of 15 years
from  the end  of the year in which  the initial subscription was made  but before  then expiry of one year thereafter, may exercise an option with the Accounts
Office in  Form H,  or as near thereto as possible, that he would  continue to
subscribe  for a  further block period  of 5 years according to the  limits of
subscription specified in paragraph 3.
(3B) In the event of a subscriber  opting  to subscribe for the aforesaid  block
period he shall be eligible  to make partial withdrawals not exceeding  one every
year by applying  to  the Accounts Office in  Form  C,  or as near thereto as
possible, subject to the condition that the total of the withdrawals,  during  the 5
year blcok period , shall not exceed  60 percent of the balance at his credit at the
commencement of the said period.
 10.   Loans:-   (1)  Notwithstanding  the  provisions of paragraph 9, any
time  after the expiry of one year from the end of the year in which  the
initial  subscription was made but before  expiry  of five years from the end
of the year in which the initial subscription was made, a subscriber may, he
so desires, apply in Form D or as near thereto as possible, together  with
his pass book  to the  Accounts Office for obtaining loan consisting of a sum
of  whole rupees not exceeding twenty five percent  of amount that  stood
to his  credit to at the ends  of the second year immediately preceding  the
year in which  the loan is applied for.
  (2)  On receipt  of an application  under sub-paragraph (1) the Accounts
Office may, after satisfying itself  that the amount  of loan applied for is not
in excess of the limit  prescribed   in sub-paragraph (1)  and that the
applicant has, till the date  of application, been subscribing  according  to
the limit  specified in  paragraph 3, subject to the  provisions  of sub
paragraph (3), sanction  the loan and enter the amount  in the pass book.
(3)  Where the application is made  by    a  person    who  has  made
subscriptions to the Fund on behalf  of a minor  of whom  he is the
guardian,  he shall  furnish  a  certificate in the following form, namely:-
  ‘ certified that the amount  for which  loan is applied for is required for the
use of ……. Who is alive and is still  a minor.”
11. Repayment  of loan and interest :- (1)  The principal amount of a
loan    under  this  Scheme    shall  be  repaid    by  the  subscriber    before    the
expiry  of  thirty  six months from the first  day of the month  following  the
month  in which then loan is sanctioned. The repayment a may be made
either  in one lump sum or in  two or more monthly installments  within  the
prescribed period  of thirty six  months.  The repayment will be  credited to
the subscriber’s account.
  (2)  After the principal of the loan is fully  repaid, the  subscriber  shall pay
interest    thereon  in  not    more  than    two monthly  installments at the rate
of  one percent  perannum  of the principal  for the period of
commencing  from the first  day of  the month  following  the month  in
which  the loan is  drawn up to the last day of  the month  in which  the last
installment of the loan       Provided  that where the loan is   repaid, only in part  within the
prescribed  period of thirty six months, interest  on the amount of loan
outstanding  shall be charged at  six per cent  per annum  instead    of  at
one per cent  per annum   from the first day  of the month  following the
month  in which  the loan was  obtained to the last day of the month in
which the loan is  finally repaid.
 (3)  The interest on the amount  of loan outstanding  under the proviso to
sub-paragraph (2) and any portion  on  interest payable, but  not paid, on
any  loan , the principal  amount  of which  has already  been repaid  within
the prescribed  period of thirty six months, may, on becoming due, be
debited  to the subscriber’s account.
   (4)  The interest recoverable  shall accrue to the Central Government .
   
 
12. Nomination and repayment after death of subscriber :-
(1)     subscriber    to  the  fund   may    nominate    in Form E or, as
near  thereto as possible, one or more  persons to receive  the
amount  stading to his credit  in the event of  his death before
the amount  has become  payable or, having  become  payable ,
has not been paid.
Note:-   Nomination may also be made in respect of an  account  opened
on behalf of a Hindu Undivided Family (HUF).
 (2)    No  Nomination    shall  be  made  in  respect  of  an  account  opened  on
behalf of minor.
 [MOF (DEA) Notification No. GSR 477 (E) dated 25.5.1994]
  (3) A nomination made  by a subscriber  may be  cancelled or varied by
a fresh nomination in  Form F  or , as near thereto  as possible by giving
notice in writing to the Accounts Office in which the account stands.
(4) Every nomination  and every  cancellation    or  variation    thereof    shall
be registered  in the Accounts Office and shall be  effective from the date
of such registration, the particulars of which shall be entered in the pass
book.
(5) If any nominee is a minor, the subscriber may appoint any person to
receive the amount due under the account  in the event  of the death  of
the subscriber during  the minority of the nominee.
(6) Notwithstanding  the provisions contained in paragraph 9-
a. If a subscriber  to an account in espect of which a nomination is
in force dies, the nominee or nominees may make  an application
in  Form G or,  as near thereto as  possible, to the Accounts
Office  together with proof of  death of the subscriber and on
receipt  of such application  all amounts standing  to the  credit of
the subscriber after making adjustment, if any, in respect of interest on loans taken by the subscriber  shall be repaid by the
Accounts Office itself to the nominee or nominees.
Provided that if any nominee is dead, the surviving  nominee or nominees
shall, in addition to the proof of death of the subscriber, also furnish proof
of  the death of the deceased nominee.
b. Where there is  no nomination in force at the time of death of the
subscriber,  the amount  standing  to the credit of the deceased
after  making    adjustment,  if  any,  in  respect  of  interest  on  loans
taken by the subscriber, shall be repaid  by the Accounts Office to
the legal heirs of the deceased on receipt of application in Form
G  in this  behalf from them.
Provided that the balance   up to Rs. 1 lakh   may be paid  to the legal
heirs on production of (i) a letter  of indemnity, (ii) an  affidavit, (iii) a
letter of disclaimer on affidavit, and (iv) a certificate  of death of
subscriber, on stamped paper, in  the forms as in Annexure to Form G.
(7) A subscriber to the Fund cannot  nominee a trust as his nominee.
13.  Power to relax:-   Where the Central Govt is  satisfied  that the
operation of the any of the provisions of this scheme causes undue hardship  to
a subscriber, it may, by order  for reasons to be recorded in writing , relax the
requirements of that provision in a manner not inconsistent with the provisions of the act.

Report dated Economic time on 15-11-11.  PPF interest rates  have been revised from 8% to 8.6 for this fiscal.  If this remais steady anybody who starts investing Rs.1 Lakh in the PPF from this year will have almost Rs. 1. 57 lakh more in his corpus by the end of 15 years.   Raising of Annual limit from Rs.70,000/- to Rs. 1 Lakh also benifit investors.  


Experts say that the hike in rate has made the PPF the best option for conservative  investors.  If a couple starts contributing Rs. 1 Lakh each every year, they can build a corpus of Rs. 61.8 Lakh over 15 Years.   However this asumes that the interest rate will remain steady at 8.6%,  a very unlikely scenario considering that the rate is linked to the yield of government bonds.. Analysts  believe that the interest rate cycle is close to peaking out and rates could go down soon.  




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