Save Smart. PPF: What you need to take note of

Public provident fund (PPF) is a popular debt scheme for investors, given its attractive tax-free treatment and the long tenure of 15 years that allows you to save towards long-term goals.

While the investment angle is well-understood, there are a few operational aspects — shifting accounts between banks and post offices, withdrawal mode at the end of the tenure, and the actual number of yearly instalments you need to make — that are not highlighted. You should be aware of these procedural points so that your PPF account operation remains smooth.

Not just 15 years

The PPF term does not close by the end of 15 years from the date of the first instalment. It actually spans 16 financial years. The 15 years start from the end of the financial year when the first payment is made. So if you open a PPF account on November 12, 2018, the 15-year tenure starts from April 1, 2019, and the maturity will be April 1, 2034.

Therefore, you end up paying 16 annual instalments instead of 15, which means you end up saving that much more.

Of course, you can also make monthly investments in your PPF account, though the total amount is restricted to ₹1.5 lakh a financial year.

Shifting accounts

Your job can lead you to shift base every few years. Even while moving from one city to another, you can transact easily on your PPF account.

You can transfer/shift your PPF account to a different branch of the same bank in a different city and also between banks and post offices. If you have an operational account — a minimum of ₹500 invested every financial year — you can move accounts easily.

For example, if you want to move from one bank to another or from a post office to a bank in your new place or to a new branch of the same bank, you will have to first give a written request to your exiting branch. Even if you transfer an account, the account will be treated as live, subject to the condition mentioned earlier; new investments in the new branch will be treated as a continuation of your previous investments.

After your written request/application is processed, the existing bank/post office will send the original documents pertaining to your account to the new bank/branch of your choice. These documents include a certified copy of the account, the account opening application, nomination form and specimen signature, along with a cheque/DD for the outstanding balance in the PPF account.

Once these documents are received at the new branch, you have to submit a fresh PPF account opening form (Form A) and nomination form (Form E or Form F in case you wish to change the beneficiaries), along with your original passbook. You also need to complete the know-your-customer procedure afresh by submitting the relevant documents — PAN, address proof, etc. Though the process sounds daunting, it is fairly simple and can be done without many hassles.

After this transfer is done, you can transact smoothly.

Withdrawal

Unless you wish to extend your PPF account after maturity — allowed in blocks of five years — you can withdraw your accumulated corpus.

There are two options. You can have the proceeds transferred directly to your savings account through the NEFT route, or you can opt for a demand draft/banker’s cheque. The former will be the better option as it will ensure a seamless transfer.

If you have a PPF account in a PSB in a different city from the one you reside in, you do not have to travel to the old location to redeem the maturity proceeds.

You can walk into the local branch of the PSB and give a written request. After scanning through your documents and request, and taking your signature in front of the manager/relevant official, the bank will attest these documents and forward your request to the branch where you hold the PPF.

By giving a cancelled cheque of the new bank account, you can request for a NEFT transfer to that account.

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