Is Joint Account of PPF Possible?
Think of tax saving investments and the first thing that comes to mind is Public Provident Fund or PPF. The PPF account allows investments up to 1.5 lakhs however, there is one glitch. The investment will not mature until it attains the age of 15 years. Good news however is that the matured amount becomes tax-free. PPF accounts are government accounts that can be opened directly through post office or from any bank that has be authorized by the government.
Now coming to the question in hand, “is it possible to have a joint PPF account?” The clean and simple answer to this question is NO.
There are several rules and binding on PPF accounts and NO JOINT ACCOUNT is one such rule. There is no exception to this rule and you have to adhere to it. Even if you give a try by some crooked means to get a joint account, you will fail miserably.
Well, this should complete our article right here but as a good gesture, we will let you know some of the basic rules and bindings of PPF account so that you don’t have to hunt for those rules somewhere else.
Here is the hand rules guide for PPF account:
- One account per person: This is not a bank account. Banks have the provision for as many accounts as one wants. For PPF one person one account is the ultimate binding.
- No joint account: We have already said this. Still, no joint accounts are allowed under any circumstances. Don’t even try.
- No PPF account for HUF: Post 2005 a new rule came in where Hindu Undivided Families cannot open a PPF account.
- Name change restrictions on PPF account: In case you are thinking of changing your name in your PPF account, you can simply forget it unless you are a woman and you just got married which led to change in your last name or surname or family name.
- Loans after 6th year is totally restricted: PPF accounts get to maturity after 15 years. We have a notion that PPF accounts allow loans. Well, that’s true but there is a limitation or restriction. Loans can be taken only between 3rd and 6th. Before 3 years have been completed, no loans and after 6 years have been completed, you can simply forget that loans against PPF deposits even exist. No matter how much you bang your head on wall, loans after 6th year are not allowed.
- Second loan only after repayment of first loan: Well, you have the option of taking out loans against your PPF account between 3rd and 6th You can take out multiple loans but there is a rule. A second loan will be granted only and only when you have repaid the first loan in full. If no then, forget about second loan or as a matter of fact, any subsequent loan. Always pay your previous loan in full before applying for a next loan.
- Loans are given at 2% interest: Well, 2% interest rate for loan – isn’t that surreal? It is true! All loans you take against your PPF account come against just 2% rate of interest.
- 6% interest after 36 months: In case you have taken out a loan and you have not returned it within 36 months from the date of taking out the loan, you are in grave trouble. The interest rate will straight away jump up to 6%. So, make sure that you pay all your loans against PPF within 36 months from the date when loan was approved and disbursed.
- PPF account can be maintained post maturity: PPF accounts mature in 15 years but if you wish to continue maintaining your PPF account, you can do so. But be informed, once you decide to continue, you have to keep your account active for next 5 years after which you need to again think whether you want to continue or not. If you want to continue, you have to invest another 5 years of time and so on.
- Most maturity, regular yearly contributions can be stopped: In case you decide to continue your PPF account after it becomes mature, you really don’t need to pay the yearly on a regular basis. You can deposit after 3 or 4 years if you want to. Once you invest, you will activate a lock-in period of 5 years. If you want money before you further invest, you can extract 60% of PPF balance before reinvesting and activating new lock-in period of 5 years.
- Post maturity lock-in period, money can be withdrawn anytime: PPF accounts are locked in for 15 years. Once the account matures, you get to withdraw your money anytime you want and if you let it sit, it will keep earning interest. However, if you decide to continue in blocks of 5 years, you have to wait for 5 years before you can withdraw.
- Courts don’t get access to PPF account: Suppose you have a loan from a bank and you default, the bank has every right to drag you to court and liquidate your assets to recover the loan amount. However, courts can never touch your PPF account. This immunity has been given by Government of India because a PPF account is a social security account. Even in cases of default, your PPF account remains safe and sound. However, government holds the right to deduct taxes from your PPF account if you don’t pay your taxes.
- PPF account can be easily transferred: You can transfer your PPF account from post office to a bank or from one bank to another at your whims. There are absolutely no charges for doing so and no bank will every charge you a single penny. However, there is no point transferring PPF account unless seriously required.
Hopefully you will find these rules and bindings useful while making decisions about your PPF account. Remember that it is a social security account and you should be very careful about what you are doing with your money.