Accountingweb has a post in which they say that 95% tax advocate and CA don’t tell their client all about tax saving schemes because of negligence or with busy schedule.
There are various schemes for claiming deduction u/s 80C. I will give detail one by one of all schemes. Today i am giving detail of Public Provident Fund Which is most popular and favorite for salary class.
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Who Can Open Account: Any Individual can open account in Public provident Fund (PPF) in his own name or on behalf of minor for whom he is a guardian and HUF.
Where to Open : PPF account can be open in any branch of State Bank of India and its subsidiaries.
Time Period : PPF is a 15 years scheme requiring minimum 16 contributions in all.
Rule regarding Deposit Amount : From Rs. 500 to 70,000 is payable either in lump sum or in installments, not exceeding 12 in a year.
Interest : The rate of interest at present is 8%. (please cotact in branch for latest updates)Interest shall be payable on the lowest balance between the fifth day and the last day of every calendar month.
Withdrawals : you can make one withdrawal every year from 7th financial year of an amount not exceeding 50% of the balance to his credit at the end of the fourth year immediately preceding the year of withdrawal or at the end of the preceding year, whichever is lower.
For example. Ram wants to make a withdrawls form his PPF account during the year 2005-06. The balance in his accoutn as follows.
Dates Amount
31.3.2005 2,00,000
31.3.2004 1,50,000
31.3.2003 1,20,000
31.3.2002 1,00,000
Thus Mr X can withdraw upto 50% of balance as on 31.3.2002 i.e. Rs. 50,000.
Maturity: 15 years from the close of the finacial year in which the subscription is first made.
Loan : The depositor can take a loan in the third finacial year
Tax Benefits: Public Provident Fune (PPF) Interst is completely exempt from income-tax u/s 10(11). The deduction u/s 80C is available on the total contribution of PPF, LIC, ULIP. etc. up to a maximum of Rs. 1,00,000(Only Rs.70,000 is eligible deduction for PPF).
Interest on public provident fund is not treated as reinvestment for purpose of section 80C as it is tax free and does not form part of taxable income.
You can take benefit of deduction even investment made in the name of minor/major child and wife.
Other Facilities
• Subscription in one or more maximum 12 instalments.
• Nomination available in the name of one or more persons.
• Nominee can not continue account of the deceased subscriber in his/ her own name.
• An account may be transferred at the request of the subscriber free of charge by one branch of State Bank of India or its Associates to Head Post Office or vice versa.
• Premature closure of a PPF account on grounds of genuine hardship could be considered only after the expiry of five years from the end of the year in which the account was opened.
• The subscriber may discontinue his account anytime after joining the fund. The repayment of the subscription with interest will be made only after 15 years form the end of the financial year in which the account was opened.
• Discontinued account can be revived on payment of Rs.50/- per year along with arrears of subscription of Rs.500/- per
Related posts:
- All You Want to Know About PPF (Public Provident Fund)
- Public Provident Fund (Amendment) Scheme, 2010 – Amendment in paragraph 9
- Latest Amendments to Employees’ Provident Fund and Pension Schemes – More Hardship for International Workers
- Tax Treatment of Provident Funds
- Mutual Fund And Tax Benefit
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{ 2 comments… read them below or add one }
When you want to invest your hard earned money for a longer period of time and get a regular income, Fixed Deposit Scheme is ideal. It is SAFE, LIQUID and FETCHES HIGH RETURNS.
Loan / Overdraft facility is available against bank fixed deposits. Now many banks don’t charges for premature withdrawal.
Dear sir,
My PPF account matures in May 2010.I want to continue my account
without any deposits.
1)Is there any time limit for exercising such an option?
2)will I continue to earn tax free interest of 8%
3)Am I free to make withdrawals or is there any limit?
Kindly clarify
Regards
B S Sarma