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Public Provident Fund (PPF) Limits

The full form of PPF is Public Provident Fund. Public Provident Fund is a government backed small savings scheme with guaranteed returns. This is a risk free instrument as it is a government initiative. It is also one of the most popular investment instruments due to its EEE tax benefits. For PPF, the current income tax laws allow a maximum tax break of Rs. 1.5 lakh per individual per financial year under Section 80C of the Income Tax Act, 1961.

PPF Withdrawal Limits

A PPF account comes with a mandatory lock-in period of 15 years. Partial withdrawals can only be made post the 5th financial year, after the year in which the account is opened. Only one partial withdrawal is allowed per financial year. The maximum amount that can be withdrawn per financial year is the lower of the following:

50% of the account balance as at the end of the financial year, preceding the current year, or
50% of the account balance as at the end of the 4th financial year, preceding the current year To make a partial withdrawal, an individual will require Form C and submit the same. In addition to Form C, KYC details such as name, account number, withdrawal amount, etc. has to be mentioned in Form C. You are also required to take your PPF passbook. Along with Form C, a declaration has to be submitted stating that no other amounts were withdrawn during the same financial year.

PPF Deposit Limit

The minimum contribution amount in a PPF account is Rs. 500 and the maximum contribution amount is Rs. 1.5 lakhs. This means that you cannot invest more than Rs. 1.5 lakhs per year into a PPF account. The contribution can be done in any amount (subject to the overall minimum and maximum) and at any time in the year. The maximum number of contributions allowed in a year is 12.

PPF Loan Limits

Loan facility can be availed from the 3rd financial year up to the 6th financial year from the date of account opening. It can be availed at any time after the expiry of one year from the end of the financial year in which the account was opened, but before the expiry of five years from the end of the financial year in which the account was opened. Form D is required to be submitted to avail loan against the PPF account. The maximum loan limit from a PPF a/c is 25% of the balance at the end of the 2nd financial year preceding the year in which the loan was applied. The rate of interest on this loan is 2% higher than the prevailing interest rate on PPF account.

Note: Amount beyond Rs. 1.5 lakh cannot be invested in a single financial year into a PPF account. Even though you can have more than one PPF account in the name of your kids or spouse, the combined investment in both cannot exceed Rs. 1.5 lakh.