PPF calculator: Currently, PPF interest rate is 7.1 per cent, which is highest after EPF interest rate and Sukanya Samriddhi Yojana interest rates.
PPF account: A Public Provident Fund (PPF) account is an EEE investment where you get income tax exemption on investment up to Rs 1.5 lakh per annum. It is to be noted that an earning individual cannot have more than one PPF account and one cannot invest more than Rs 1.5 lakh in their PPF account in a particular year.
However, a married man can double his PPF investment by opening a PPF account in the name of his wife. This will help the earning individual to invest in PPF up to Rs 3 lakh per annum (Rs 1.5 lakh in self and Rs 1.5 lakh in wife’s PPF account).
How to double annual PPF investment limit
If an earning individual has exhausted one’s PPF account limit in a particular financial year and still wants income tax exempted income, then opening a PPF account in the name of one’s wife is advisable. By doing this, one will be able to double one’s PPF investment cap to Rs 3 lakh.
However, the overall income tax exemption under Section 80c on investments will continue to remain capped at Rs 1.5 lakh per annum.
How does it work after you open PPF account in your wife’s name
If an earning individual invests in wife’s PPF account, the source of investment would continue to remain with the husband and the PPF interest earned in wife’s PPF account will get clubbed with husband’s income too. But, the PPF interest is income tax exempted and in that case even if the wife’s PPF interest earned during the year is clubbed with husband’s income, it will remain income tax exempted.
Such move is advisable for those investors who have low risk appetite and they don’t want to invest in the market-linked investment tools like mutual funds, stocks, NPS, etc.
Currently, PPF interest rate is 7.1 per cent, which is highest after EPF interest rate and Sukanya Samriddhi Yojana interest rates.
How to merge multiple PPF accounts, as per the Department of Posts circular
If PPF deposits does not exceed prescribed limit
An individual will have an option to retain the PPF account of his choice, provided deposits made in both the accounts taken together are within the prescribed deposit ceiling (currently it is Rs 1.5 lakh per financial year). If the PPF accounts are held in the same operating agency (say you have more than one PPF with different banks or two accounts with the post office), then the merger can be done easily by using the process to transfer of PPF account.
If PPF deposits exceed prescribed limit
There may be a situation where the deposits made in the multiple PPF accounts together exceed the prescribed limit. In such a situation, the excess amount breaching the prescribed deposit limit in the PPF accounts will be refunded to the individual after the merger of the account. This amount will be refunded without any interest.
The PPF account office will adjust the interest before transferring the balance to the retained PPF account. Here also, the date of opening of the retained account will be considered as actual opening date for PPF account. This date will be considered for the calculation of maturity and other purposes such as loans, withdrawals etc. Further, date of transfer/credit of balance in the retained PPF account, shall be deemed as date of deposit for the purpose of loan/withdrawal etc.
