Post Office PPF Account: Interest Rate, Eligibility Criteria, How To Open

The Indian Postal Service is not only responsible for the delivery of packages and posts but also carries out various other extremely vital tasks such as providing savings and investment services to the citizens. One of the most important savings and investment schemes used by millions across the country is the Public Provident Fund (PPF) scheme. The Public Provident Fund offers a secure avenue for tax savings and risk-free investment for the public. It also offers very attractive interest rates for investors. Let’s take a closer look at how much interest investors can earn through a Post Office PPF account.

Since the Public Provident Fund is a government-supported investment scheme, the rate of interest on PPF remains the same for all the post offices and banks that provide the PPF service. The PPF interest rate is announced every quarter by the Ministry of Finance. At the time of writing this article, the interest rate of PPF is 7.1% per annum. The interest payments are made to the investors on March 31 of every year. Moreover, the rate of interest earned through the PPF account is exempt from taxation as per the Income Tax Act, 1961. It is also important to note that the interest on PPF is calculated based on the minimum balance in the investor’s account between the 5th and the last date of every month. Hence, it is recommended that any deposits to the PPF be made before the 5th of each month.

An individual must meet the following eligibility criteria if they wish to open a post-office PPF account:

• An individual who works for a private company, or self-employed or a pensioner, or is part of any other similar category is eligible for opening a post office PPF account. 

• An individual can only open one Public Provident Fund account associated with their name. In case two PPF accounts are opened under one name, the money from the second account will be refunded without interest and the account will be closed. 

• Guardians can open a PPF account on behalf of their minor child. However, in case of the death of the guardian, the child cannot continue to use the PPF account. The money in the PPF account would be refunded and the account will be deleted. 

• NRIs (Non-Resident Indians) cannot open a Public Provident Fund Account. If NRIs have an open account that was activated while they lived in India, the account would remain till it reaches maturity.

Previously, individuals had to manually visit their local post office in order to open their PPF accounts. However, recently the government has introduced an online system for opening post office PPF accounts. You can open an online post office account by following the exact steps given below:

Step 1. Go to the DOP internet banking page on the official India Post website and log in to your Post Office Savings Account through your user ID and password. 

Step 2. Once you have successfully logged in, go to the ‘General Services’ tab and then click on ‘Service Requests’. 

Step 3: Under ‘Service Requests’, you will have to click on ‘New Requests’ and then on the option that says ‘PPF accounts - Open a PPF account.’ 

Step 4. Deposit the amount you wish to invest. The minimum amount is ₹500 and the maximum limit is ₹1.5 lakh. 

Step 5. Then select the Post Office Savings Account from which you wish to add funds to the PPF account. 

Step 6. Accept the Terms and Conditions and enter your transaction password. 

Step 7. Download your deposit receipt. Your PPF account will shortly be created and you will be able to access it under the ‘Accounts’ section on the website.