Public Provident Fund Scheme was introduced by Government of India on 01.07.1968 and it provides the depositor the twin benefits of attractive return and tax benefit. The Scheme is operational in select branches of IOB. (List furnished separately) The salient features of the Scheme are as under:
a. Individual or individual as guardian of a minor can open the account.( cannot be opened in Joint names).
b. HUF are not eligible.
c. Non Resident Indians are not eligible to open the account.
d. Only one account can be opened by an individual in one name.
e. Those persons who subscribe to General Provident Fund or Employees’ Provident Fund can also open the account.
The account is of 15 years duration and the account can be continued for one or more blocks of 5 years without loss of interest on written request within 1 year from the date of maturity.
Interest at the rate of 8.60% w.e.f 01.12.2011 ( 8.00% p.a upto 30.11.2011) is credited to the account on 31st March of every year on the minimum balance between 5th day and end of the month. (Increase in interest rate to 8.60% p.a. came into force w.e.f.01.12.2011)
Loans and Withdrawals:
If the account is continued after maturity, a partial withdrawal up to 60% of the balance of credit at the commencement of the extended period is permitted. The depositor is eligible for a loan. The first loan can be taken in the third financial year from the financial year in which the account was opened up to 25% of the amount at the credit at the end of first financial year.
Withdrawal is allowed every year from the end of the 5th year. The amount is limited to 50% of the balance at credit, at the end of 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year which ever is lower less the amount of loan if any drawn by him which remains unpaid.
Loan is repayable in 36 months.
w.e.f 01.12.2011, Interest is payable on the loan at 2% per annum of the principal ( 1% p.a upto 30.11.2011) if interest is paid in not more than two monthly instalments,
and 6% per annum if the loan is not fully paid within 36 months.
The subscriptions to the account qualify for deduction under section 88 of IT Act. The interest credited to the account is totally exempt from Income Tax. The amount standing to the credit of the account is fully exempted from Wealth Tax.
Discontinued account can be revived on payment of Rs.50/- per year along with arrears of subscription of Rs.500/- p.a.