The Public Provident Fund (PPF) is a popular long-term savings scheme among Indian investors due to its government backing, tax benefits and assured returns on deposits. Offered through banks and post offices, the scheme allows individuals to make monthly or annual contributions while earning tax-free interest under existing rules.
The scheme currently offers an interest rate of 7.1% per annum, which compounded annually and is reviewed by the Central government on a quarterly basis. Since PPF accounts can be opened across multiple authorised institutions, a common question arises on whether investors are permitted to maintain more than one account simultaneously.
How many PPF accounts are permitted?
According to rules in the PPF scheme, 2019, an individual can open a PPF account by submitting Form-1 at an authorised bank or post office. However, the rules specify that a person is permitted to hold only one PPF account in their own name, regardless of the institution where the account is opened.
The scheme does not allow multiple personal PPF accounts across different banks or post offices. The rules also clearly mention that joint PPF accounts are not permitted under the scheme, according to provisions published on the official website of the National Savings Institute under the Ministry of Finance.
Opening separate accounts at different banks or post offices does not create additional eligibility as are linked to the depositor’s PAN and identity details. If multiple accounts are found, authorities may treat the additional account as irregular under the PPF rules. In such cases, contributions made into the extra account may be returned without earning interest, while only one valid account is permitted to continue.
Why only one account per person is permitted?
Restricting PPF investors to a single PPF account is aimed at preventing the misuse of tax benefits through multiple holdings under the same scheme. Since the scheme offers tax advantages on both contributions and returns, limiting accounts ensure the scheme is used within defined limits.
However, an investor is allowed to open one PPF account on behalf of a minor. The rules also clarify that only one account can be opened per minor, meaning another guardian cannot open a separate PPF account for the same child.
How much can you invest in PPF every year?
A depositor can invest a maximum amount of ₹1.5 lakh in the every financial year. As per existing rules, each account holder must make a minimum contribution of ₹500 each year. These contributions can be made either on a monthly or annual basis.
A PPF account comes with a mandatory maturity period of 15 years from the end of the year in which the account was opened. You can subsequently extend the account in blocks of 5 years indefinitely, with no upper limit on the number of extensions. To do so, the account account holder must submit Form 4 (or Form H at some institutions) to their bank or post office within one year of maturity.
What are the tax benefits of PPF?
PPF enjoys one of the most favourable tax treatments among investment options in India, as it falls under the (Exempt-Exempt-Exempt) category. This means that contributions made to a PPF account are eligible for tax deduction under Section 80C of the Income Tax Act, up to ₹1.5 lakh in a financial year.
Additionally, the interest earned on investments is completely tax-free, making it a suitable option for long-term savers seeking to maximise their post-tax returns. Apart from that, the maturity proceeds withdrawn from a PPF account are also entirely exempt from tax, ensuring investors receive the full benefit of their accumulated corpus without any deductions.