How to get maximum interest in PPF(Public Provident Fund)?
For the past couple of weeks, I have been asked a question by some of the readers about how to get maximum interest in PPF account. While this topic could be small, I thought of writing an article so that it would be useful for the readers. Can we get maximum and highest interest in PPF account, if so, how?
Before I jump on how to earn maximum interest in PPF, I would provide some basic information about Public Provident Fund (PPF). In case you are already familiar with the features of PPF, you can skip this section.
Also read: EPF Vs VPF Vs PPF – Which is better investment option?
What is PPF and what are its features?
- PPF is a Public Provident fund, which is a good retirement option that can be used by an investor. This is alternative to VPF and EPF which are restricted only to employees. PPF on the other hand can be invested by any one for tax saving or for retirement saving purpose. Below are the features of the PPF account.
- Investment up to Rs 1,50,000 per annum qualifies for IT Rebate under section 80 C of Income Tax Act (FY 2014-15 onwards).
- Current interest rates are 8.70% per annum.
- Loan facility in PPF account is available from 3rd financial year up to a 5th financial year. The rate of interest charged on loan shall be 2% per annum above interest paid.
- Withdrawal permitted from 6th financial year.
- Non-Resident Indians (NRIs) are not eligible.
- An individual cannot invest on behalf of a HUF (Hindu Undivided Family) or Association of persons.
- Minimum investment is Rs 500 and maximum is Rs 150,000 (effective Financial 2014-15 onwards)
- Best suitable for those who want to get tax exemption u/s 80C up to Rs 1.5 Lakh as well as those who want to accumulate funds for retirement purpose thereby earning safe and highest returns.
How to get maximum interest in PPF?
Now, coming to the main point, there a few ways on how to earn maximum interest in PPF account.
a) Interest paid on lowest balance between 5th and 30th/31st of the month: You should first know how interest in PPF is computed. Interest is computed on the least balance between 5th to 30th / 31st of the month. Means if you are depositing every month after 5th, your deposit would not earn interest for that month. Many of us make regular deposits in PPF account like Mutual fund SIP. However, if you know this tip, you can earn maximum interest in PPF. E.g. if you have deposited Rs 10,000 on 6th or after this date, you would be missing Rs 75 interest for that month. Just imagine that if you are making 10 installments in a year after this cut-off date you would be missing approx Rs 750 interest for that year.
b) Invest in lumpsum before 5th April: We all know that we can deposit up to Rs 1.5 Lakh at any time of the financial year to claim tax benefit u/s 80C. In such case instead of depositing every month or during year end, try investing at the beginning of the year by 5th April of that year. This would help you to earn maximum interest for the financial year along with benefits from income tax.
Also read: Complete guide on Post office schemes in India
c) Use online system for transfer instead of direct deposit: I agree that many of us would think that going to the bank before 5th and depositing would be painful job. You can open a PPF account in SBI or any other bank which is offering PPF account. Instead of cash or cheque deposit, you can do a direct online transfer from your SB account to PPF account. This is one way of ensuring that you get maximum interest by depositing before the cut-off date.
Conclusion: While it is important to invest in safe and good investment option like PPF, I feel it is equally important to keep a small discipline where you can gain maximum interest on your PPF account.
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Suresh
How to get maximum interest in PPF
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Hi,
Like to know which types of deposit is best monthly or yearly? As I noticed on online calculator maturity value is difference between monthly and yearly deposit. Kindly help
i have been working IT company already i have the PF account. Can i still go ahead and create the PPF account.
PF stands for Provident Fund where employee and employer contribution is deposited. PPF is Public Provident Fund which any individual can open. The tenure is 15 years. You can open PPF account.
Hi Suresh,
I want to invest in PPF in order to get tax saving for this year 16-17. Can you guide me on my investment .or give me your contact details
Hi, Suresh Thank you very much for this informative article. I want to open PPF account in Next month (March) and deposit whole amount. Once i deposit whole amount in March, i cant add more amount in April. As i can pay whole amount at once should i open PPF account in March or open the PPF account in April this year and deposit the amount at once.
Hi Srinivas, You can invest Rs 500 while opening the PPF account and later invest upto Rs 1.5 Lakhs in next financial year i.e. Apr to Mar
can you provide some info on withdrawal process for PPF account (one time/ monthly pension both), and how a pension amount to be received is calculated
Can you share some info on how PPF works at the time of withdrwal i.e how pension amount gets calculated and ways to withdraw it (one time/ monthly etc)
Does all banks provide online fund transfer to PPF account? Which banks will support?
all banks support Ashwini
how to get maximum interest in ppf account
Nihal, I have already given the inputs in the article. Do you have any other question?
I never thought abt 2nd point about investing lumsum amt in first month instead of regular basis …amazing idea..
Thank you Ramawat. If you like our blog, keep recommending to your friends
Dear Sir,
I start Invest in PPF From next month Feb-2016, is this write time to getting maximum interest from PPF. and what is better way to invest , per month invest or per year.
waiting your conclusion
Thanking you,
Anand
i do not understand the difference between
online payment rather than cash or cheque
Hello Suresh
Congrats for become a crorepati in such a small period.. Appreciate your efforts and dedication.
I need to know how much money you invested on monthly basis to achieve This target and the best mutual fund to start sip. I would also like to follow the same way to get This target.
Regards
Pramod
You would hear in coming weeks
If I wish to withdraw the entire corpus (100%) at 60 yrs from NPS can it be done? If Yes what is the penalty?
HelloSuresh,
Is it OK if Istart PPF account from next month ( August 2015) or should wait till Apri’l16 ?
Nothing wrong in starting now. You can get interest from now to Mar-16. However when you are depositing some money try to deposit before Apr 4th where you can enjoy highest tax free return for the year
Dear Suresh, I am planning to opt for 1000/- per month as VPF through my Office Salary account. Will this take away from the 1.5L yearly limit for PPF? Or are these mutually exclusive.
Suave, No. It is part of Rs 1.5 LPA 80C exemption
I want to open ppf account 4th may 2015..m i eligible for tax exemptions gor current financial year 2015-2015??
Yes. Any investment made before 31-Mar-2016, you are eligible for deduction for 2015-2016 financial year.
I read that withdrawals are permitted from 6th year onwards.But how much can I withdraw and how much has to be kept invested ?
IDBI also provide PPF. I myself has one with them.
Excellent article…Thanks for taking time and helping us
IF WE SHOW WIFE AS A WORKING WOMEN (TUTIONS /SMALL BUSINESS) THAN CAN SHE HAVE SEPARATE PPF A/C, ALTHOUGH SHE IS NOT FILING INCOME TAX RETURN.
CAN HER HUSBAND DEPOSITS FROM HIS SALARY 1.5L + 1.5L ?
Even BOI offers PPF account. I have inquired about this at branch. So, go ahead to save tax. 🙂
I have a ppf account and I have deposited 150,000 and availed 80c benefit as well. Now can I deposit another 150,000 in my minor daughter account , I will not claim 80c benefit for the same but just want to deposit for tax-free interest (fd) for her future.
Yes, you can do that. However you cannot open another PPF account in your daughter name and you as guardian. You can open account in the name of daughther and guardian as your wife. This is good strategy to invest Rs 3 Lakhs per year and get approx Rs 94 Lakhs after 15 years.
Till now I have been depositing in PPF A/c at any time of the year, generally in Dec or Jan. After reading this particular article on PPF I am now aware that I need to deposit subscription before 5th April in lumpsum. Or should I start depositing a particular amount every month?
Pramod, if you can invest by 5th April, you would get maximum tax free income for that year apart from 80c exemption. Otherwise you can invest at any time in a year.
Hi ,
Thanks for your wonderful article . I have opened PPF on 30-OCt-2013 and paying amount monthly before 5th of every month..
I have two questions :
1. I read only 12 installments in online per year. In my case (started on 30-Oct-2013) will next (30-0ct-2014) will be one year . Please clarify on this
2. If i want to invest as a whole lump amount before 5th April, In my case when i should invest
Satheesh, Financial year is from 1-Apr to 31-Mar. Just ensure that you do not deposit more than 12 during this period. For 2014-15, you should have invested by 5-Apr-2014. For next year you can invest before 5-Apr-2015
Wow ..its great article about ppf. I am planning to open ppf very soon. I need one suggestion Suresh that which bank should i prefer to open ppf account in sbi, icici, idbi and union bank and why? Please reply soon so that i can proceed with bank.
Currently only SBI and ICICI Bank are offering this apart from post office. You can open with any of them
Thanks a lot Suresh…
I have in bank of india but I feel SBI is better. Can I transfer it to SBI? If yes how?
I don’t think BOI is offering PPF. I heard only SBI and ICICI Bank are authorised to open PPF account. Pls let me know in case what you said is correct ?
Hi Suresh, you should update this article to include the information that the maximum limit in PPF has now been raised to Rs 1.5 lakh.
Updated. Thank you.
Can I transfer funds online from my bank account to the PPF account maintained by wife
Yes, very much JJ
i am at high risk loan taken 20lkh salary per annum 4.60lkh balance left 8 lakhs. how to maxmise for returns till the age of 60 for my retirement.
Hi, I am Sunil. I recently read your articles on mutual fund investments. Very helpful, I have some questions. Before asking questions, let me tell you about my mutual fund investment details.
I have SIP as follows:
1) sbi magnum tax gain (G) -1000/-
2) hdfc equity (G)-2000/-
3) BSL FRONT LINE EQUITY-2000/-
4) BSL TOP 100-3000/-
5) SBI MAGNUM BLUE CHIP-2000/-
no,1 & 2 I have since five years, while 3, 4, 5 I have started in April-14.
I am 42 years old. I want to keep on investing for at least 10 years from today.
I have reasonable risk apetite. Is my portfolio ok?
How much approximate return I may get after 10 years i.e. in 2024-2025?
I am planning to invest 2000/- p.m. further soon through SIP. Which fund should I select?
I have PPF (600000/-, F. D.-500000/-) and other some misl. investments.
I will have 250000/- in Dec-2014 from rd maturity. Where should I invest them further to get max. return after five years.
I don't want to invest directly in equity market, gold and rear estate.
Thanks in advance. hope for your quick reply. thanks.
Regd 5 funds, they are good except HDFC Equity fund which is not consistent performer. Review and exit. Invest in largecap or diversified funds like ICICI Pru focussed blue chip fund,HDFC Top-200, Birla SL Frontline fund, BNPP Equity fund, UTI Opps fund and Quantum long term equity fund. You can pick any of these funds.
HI,
Thanks for valuable advice about my mutual fund portfolio. Are following funds ok for further investments?
HDFC BALANCE FUND/ HDFC PRUDENCE FUND/HDFC MID CAP OPPERTUNITY FUND
TATA ETHICAL FUND, SBI EMERGING BUSINESS FUND, BSL PURE VALUE FUND?
Good funds Sunil. Stay invested.
Dear Sir,
I want to deposit Rs. 50000/- in PPf account. Will it be okay to deposit all money in the month of july or should i deposit in 5 equal installment.. If I deposit Rs. 50000/- at one go in the month of july then will I be able to earn interest in the following month becoz in the following month of july I will not be depositing any money. Pls clarify..
Thanks & Regads,
Anand
Anand, If you invest in Jul, you would get interest from Jul itself (from that date) for Rs 50,000
hello sir i like to know what is the diffrence b/w f.ds and ppf account .if i deposit 1lakh upees in fdswith (9.25% intrest rate) for 15 years after filling up form (g)and same in ppf with (8.50%intrest rate).what will be the diffrence.please explane .
Hi Eish, There are 3 main differences 1) Pre tax returns are high in FD 2) You can break FD anytime, however PPF there is lockin period for 15 years 3) FD returns are taxed based on your income tax slab. On other hand, returns from PPF are tax free. 4) PPF is tax efficient investment. Even If you are in 10% tax bracket, PPF would give you higher post tax returns.
What will be the minimum amount accumulated in the SBI PPF account if I save Rs 1 lakh per annum for 20 years?
Hi Ratnadip, It depends on the PPF interest rates which Govt. of India declares every year. Currently it is ranging between 8.5% to 8.75%. Even if we take conservative number @ 8% p.a. After 20 years, the approx amount would be Rs 50 Lakhs.
if one deposit rs 40000 on 4th April and rest 60000 on 4 May how much it effect
Amar, you may not get 1 month interest on Rs 60K where you miss the opportunity to maximise such returns for the financial year.
He said, he will invest 60K on 4th May. So, he will not get 1 month interest for 60K not 40K.
Tks Sri for correcting this, I have corrected the comment.
if one depoisted in bank by cheque on 4th but bank take it on 5th april. Should one miss the interest of that month
Yes Amar, It depends on when the cheque is credited in your account
what about interest. How it is calculated. Should one get interest of April if cheque is credited on 5th or interest will be calculated from may
Amar, if this is credited on 5th April, you would get the interest for Apr also.
Dear sir my age is 27 year and I m in central govt job..i hav hdfc top 200(1k/month),hdfc mid cap opp(1k/month), and sbi IT(2k/month) ..i want to know how is my portfollio..And should I invest in IT sector fund or switch to any other diversified fund..plz guide me sir..thanks in advance
Arvind, You have invested one in large cap, one in mid-cap and another in sector fund. Portfolio looks good. However invest more into large cap and diversified going forward to balance your portfolio
Thanks sir …sir Plz tell me should i carry forward my investment in IT sector mf..i just started it 2 months back ..
Yes you can continue for some more time, but not for long term
thanks a lot sir u give me ur valuable time to reply my email…As HDFC TOP 200and ICICI PRU FOCUSED BLUECHIP are peers then can we invest in both fund as u told me that Should invest more in Large cap..or should invest other than HDFC TOP 200 peers..bcoz i hav hdfc top 200 in my porfollio ..tkanks in advance .
You can invest both.
Sir, As i told u that i am investing SBI IT MF but i think it is good to invest in IT sector .. Can u plz suggest me to switch into SBI Magnum Mid cap fund.. How it will be …SBI magnum mid cap (direct) is good for long term ..or stay invested in IT sector for 1- 2 year..thanks
It depends. Currently IT sector looking good for next 1-2 years. You can stay invested.
Sir, if i want to invest more than 1 lakh in PPF (5 year passed) but it is not allowed then what should i do.
No choice Amar. This is the limit.
should i stop investment in PPF and choose other way, if yes then how. If no then (continuing with my PPF) i am telling you that in previous 5 year, i have not invested in begining of 2 year of my. Can i Cover up that.
No Amar, the amount is yearly limit. You cannot invest from previous year’s deficit amount in PPF. You can choose other options if you want to get tax free investment. Pls check this article. https://myinvestmentideas.com/2013/05/best-tax-free-investments-in-india/
Hi,
I had posted a query yesterday regarding accessing ourpf account details online.
Canyou pls help find a solution? This and a couple of my other mails abt retirement plans have disappeared from ur site.
Prakash
Prakash, I answer queries within 48 hours and some slip to 72 hours in case I am busy. I am clearing all of them now. Pls check whether your queries are answered today, I am clearing almost all of them.
Hi,
I have been investing in ppf for the past 10 years. Iam not sure the interest calculated by the staff at the office is correct. Is there some way I can cross check ghd amount? Is there a website for ppf where I can access my account asin the case of banks? Pls guide me.
Thankyou
Hi Prakash, Every year the interest amount would be credited during Feb/Mar. If you have online account you can view it, else you need to go to bank and update your statement.
Hello Sir, I am planning to invest in my retirement. I am 38 years old working man. Could you please advice, besides PPF, what other BEST options do I have? We (My family and I) may be moving to USA permanently within couple of years. However, I do want to continue investing in retiment here in India because we would be spending our retire life here in India. Thank you.
Amit, There are several ways where you can plan for retirement. Pls read this article where you would get several ideas. https://myinvestmentideas.com/2013/05/7-ways-to-invest-retirement-money-in-india/
Hi Suresh, thanks for your reply. The article you have suggested above https://myinvestmentideas.com/2013/05/7-ways-to-invest-retirement-money-in-india/ is for after retirement NOT before retirement. I would like to invest for my retirement. Not after I retired. Please suggest BEST options. I am 38 and I would like to retire at the age of 60. Thanks.
Hi Amit, Yes the article itself suggests that ways to invest retirement money. This is not for preparing for retirement. You can look for several options like PPF, EPF/VPF, NPS etc. which are basically help you for planning for retirement. Alternatively you can invest in long term investment options like large cap mutual funds, diversified funds etc., to get higher returns. However note these carry some risk.
Hi Sir,
I Have PPF A/C in SBBJ bank, city Jaipur. Can i deposit money in PFF a/c from other bank A/C online (ICICI,Gurgaon) via NEFT??
Please advise.
Manish, This is possible. However one reader on this article commented saying SBI has not accepted the transfer from another bank to PPF account directly. They returned the funds. You may try for small amount. Alternatively you can check with SBBJ account customer care before making the transfer.
Yes, it is possible to do online deposit to PPF A/c maintained with SBI from non-SBI accounts. I have personal experience doing this from ICICI Bank and Corporation Bank. I works very similar to NEFT transfer to any Savings account.
Hi Suresh Sir,
Which is better investment option between PPF & NSC?
I feel it is PPF as you would get tax free returns after 15 year tenure.
Very informative article. Thank you Suresh for the timely article on PPF investment.
Question: I am a sole bread earner in my family and I maintain a PPF account. However what I want to know if I can open a new account in my wife (who is not working) or kids (under 18) can also open a PPF account and start saving for the rainy days?
Hi Krishna, There are no restrictions on opening account and your wife can open the account. However I am not sure about kids under 18.
It is possible to open PPF accounts in wife's and minor children's name. However combined investment per year should limited to upper limit applicable (100K at this time). Infact accounts for minor children (particularly 3 Years) is an effective Tax saving strategy. Maturity proceedings will be that of children (after becoming major) and any investments and profit thereon will be taxed on Child's head (not that of parent).
Woww….such a nice article. I am planning to open a PPF A/C.
Thanks for sharing
Thanks Ruchi for your feedback.
I made an online transfer to SBI PPF account on 05.01.2014 (Sunday), now I have doubt that SBI will consider it to be deposited on 05.01.2014(Sunday) or Monday- 06.01.2014.
Please put some light on the issue of online transfer into PPF on holidays and whether they are considered for interest on next working day or same day(sunday).
Hi Priyesh, Any funds transfered through online would go only on working days. So your funds would get credited on monday i.e. 6-Jan-14.
There is a problem with online transfer of funds to PPF Account maintained with SBI.
While transfering funds ONLINE from another Bank A/C to PPF A/C with SBI, it does not show the option of "PPF Account".
Funds transferred by me Online in this manner, after ticking "Saving Account" Option, were rejected and recredited to sending bank account.
No solution could be found despite discussing the issue personally with the Chief Manager of SBI where I have my PPF A/C. The solution offered by him was "Open a Saving Account with our branch to avoid any problem…..!!!!!!!!!!!!!!!!!!!!!!!!!!!!" So much for customer service/IT Awareness/Problem solving !
If any of the readers have inputs on this issue, please share.
Yes Bakshi, I had similar issue, but later I was able to do that. Check with your banker now and I don’t think this problem is still continuing
Few more points I would like to add: (as per the TOS mentioned in my PPF a/c in SBI)
a. We are allowed to deposit upto 12 times per year.
b. We are allowed to invest more than 1 Lakh per year. However, there will be no interest paid or no IT rebate for the amount more than 1 lakh.
c. If we have savings account in SBI, we can open the PPF account online and submit the documents afterwards. We require to submit couple of photos, ID and address proofs. Once submitted they will create the account and provide us the pass book.
Thanks
Point no1 and 3 are good. But point no.2, if we do not get interest, there is no point in investing Sri. Thanks for the feedback
That’s right. It answers the question what will happen if you invest more than 1 Lakh in a year. This question arised in my mind, when I have been told about the limit.
Nobody is going to stop us investing more than 1 Lakh however, it is no use.