What is the PPF interest rate for July-September quarter of FY 2023-24

Yet again the Public Provident Fund (PPF) interest rate for the July-September quarter of FY 2023-24 has been kept unchanged at 7.1 per cent. The finance ministry made this announcement via a circular issued on June 30, 2023.The interest rates of schemes like the 1-and 2-year post office time deposit, 5-year recurring deposits have been hiked, for the second quarter of the current fiscal.PPF, also known as the Public Provident Fund, is one of the most well-liked investment options in India. The popularity of PPF can be attributed to a number of factors, including guaranteed returns, tax advantages on the amount invested, and tax-free returns.

Tax Benefits of PPF

PPF investments are eligible for Exempt-Exempt-Exempt status, or EEE. On the amount invested, PPF offers exemption. Under Section 80C of the Income Tax Act, PPF investments are eligible for tax deduction benefits. Another exemption is applied to PPF account interest, which is not subject to tax. The proceeds from the PPF account’s maturity are subject to the third exemption. A PPF account is exempt from Wealth Tax and Capital Gains Tax on all maturity proceeds.

Minimum and Maximum PPF Contribution

In accordance with current PPF regulations, the account must receive a minimum annual deposit of Rs. 500 to remain active. PPF now only permits annual contributions of up to Rs. 1.5 lakh. The maximum annual contribution of Rs. 1.5 lakh is, however, liable to change from time to time.

According to the SBI website, “The subscriber should not deposit more than Rs.1,50,000 per annum as the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act. The amount can be deposited in lump sum or in installments.”

PPF partial withdrawal

According to the HDFC Bank, “ According to PPF partial withdrawal rules, you can withdraw up to 50 percent of the amount in your PPF Account after seven years, starting from the end of the year you made your first contribution. You can make only one partial withdrawal each year. To make the withdrawal, you will have to submit the PPF passbook and an application to the bank/ post office. The amount withdrawn is exempt from income tax. This too remains unchanged in the PPF withdrawal rules 2021. According to PPF Account withdrawal rules, the amount would be lower of these two: 50 percent of the balance in the account at the end of the financial year, or 50 percent of the balance at the end of the fourth financial year preceding the year of application.”

Premature closure

In certain circumstances, you may be able to close your PPF account before the 15-year term expires. For example, seeking treatment for a life-threatening sickness that the account holder or dependents are suffering from, or paying for higher education. The PPF withdrawal regulations 2021 have included another scenario in which the PPF account can be liquidated prematurely – when the account holder’s residency status changes.