How to open public provident fund online
Table of Contents
What is a Public Provident Fund?
The Government of India's Public Provident Fund is a retirement savings scheme that aims to provide everyone with a secure post-retirement life. It was introduced in 1968 by the National Savings Institute of the Ministry of Finance. The scheme's principal goal is to encourage people to save small amounts of money by providing a safe investment with tax benefits. Also, because EPF/GPF is not available to self-employed people or those who work in unorganised sectors, the Public Provident Fund is a great alternative for them. This article discusses some valuable information about the Public Provident Fund account, as well as the step-by-step process for opening the Public Provident Fund online with the preferred bank.
Features of Public Provident Fund
- Public Provident Fund lock-in period: A Public Provident Fund is a long-term investment with a 15-year lock-in period, so the money saved in a Public Provident Fund account can only be withdrawn when the account reaches maturity, i.e., 15 years after it was opened. At the end of the actual lock-in term, this tenure can be extended for another 5 years. Premature withdrawals are permitted, but only in extreme circumstances.
- Public Provident Fund interest rate: Attractive interest rate of 7.1 per cent p.a., which is totally exempted from tax under Section 80C of the Income Tax Act. The interest is computed each month on the lowest Public Provident Fund balance in the account from the 5th day to the last day of the month, and the amount is credited to the Public Provident Fund account at the end of each financial year. As a result, Public Provident Fund investors should contribute to their accounts before the 5th of each month.
- Minimum and Maximum Investment: The minimum deposit value is Rs. 500, with a maximum deposit amount of Rs. 1,50,000 every financial year.
- Taxation: Public Provident Fund also provides the best tax benefits because it falls under the Exempt-Exempt-Exempt (EEE) category of the tax policy, which means that money invested in Public Provident Fund in a given financial year is exempt from a person's taxable income under Section 80C for that year, and the interest earned on Public Provident Fund deposits, as well as the accumulated amount, is tax-free.
- Loan against Public Provident Fund: A loan against the Public Provident Fund balance is allowed for the account holder. The loan can only be accepted between the beginning of the third financial year and the end of the sixth financial year after the account is opened. From the seventh financial year onwards, a partial withdrawal facility is provided.
- A Public Provident Fund account can only be opened by an Indian resident.
- Public Provident Fund accounts are not offered to NRIs. A resident Indian who becomes an NRI after creating an account, on the other hand, can keep the account open until it matures.
- Public Provident Fund accounts can be opened by parents or guardians for their young children.
- Multiple accounts and joint accounts are not permitted.
What are the documents needed to open a Public Provident Fund account online?
Some important documents required to open a Public Provident Fund include
- Account Opening Form or Form A ( it asks for details like permanent address, name, date of birth, Permanent Application Number of the applicant, passport size photographs, identity proof - Aadhar card or Voter Id etc.)
- KYC documents for verification of identity.
- PAN Card ( If a person does not have a PAN card, he or she may provide an attested copy of government-approved identification
- Passport size photographs.
- Form E for adding a nominee to a Public Provident Fund account.
What is the procedure for opening a Public Provident Fund account?
The steps for opening an online Public Provident Fund Account are as follows-
- Log in to your online banking account.
- Choose the 'Open a Public Provident Fund Account' option (for different banks, it might vary as to where to find this option)
- Between a 'self account' and a 'minor account' select the appropriate option.
- Fill in the required information, such as nominee information, bank account information, and so on.
- Verify the information, such as your Permanent Account Number (PAN).
- After you've double-checked the information, enter the amount you want to deposit into your Public Provident Fund account.
- You'll be asked to set up instructions, which allow the bank to deduct the amount at regular intervals or all at once.
- You will receive the OTP on your registered cellphone number once you have made your decision.
- Your Public Provident Fund account will be opened once this verification is completed. It is recommended that you note the account number for future reference.
- Certain banks may even require you to send a printed copy of the information entered, together with the reference number, to the appropriate bank along with your KYC information.