When it comes to long-term savings, the Public Provident Fund (PPF) is one of the most trusted investment forms in India. Backed by the government, this scheme offers tax benefits, guaranteed returns, and financial security, making it a favorite among investors.
Such curves make some wonder if they can open multiple PPF accounts to maximize benefits. But the rules are clear- let us break them down.
Can You Open Two PPF Accounts?
As per the PPF Scheme, 2019 (formerly 1968), an individual is allowed to have only one active PPF account in their name at any point in time. This means:
- There can be no multiple PPF accounts opened in combination with different banks or post offices.
- If anyone accidentally or intentionally opens more than one account, only the first one will be valid.
- The rest will be closed, refunded with the deposit amount-without interest.
- It maintains fairness and protection against misuse in the tax benefit provisions of the scheme.
Can You Open a PPF Account for a Minor?
While you’re not allowed to have two PPF accounts under your name, you can open up a PPF account under your minor child, where you act as the guardian. There’s a catch, however:
Combined annual contribution in both your account and your minor child’s account shall not exceed ₹1.5 lakh in one financial year.
For example:
- If you invest ₹1 Lakh in your PPF account, you can contribute only up to ₹50,000 in your child’s account.
- Anything more than that will not get any additional tax benefits, nor will the excess amount earn you any interest.
Is a Joint PPF Account Allowed?
No. Joint accounts do not meet the PPF scheme requirements. It is strictly an individual account, that is:
- You cannot open a PPF account collectively with any other individual, i.e., your spouse, parent, or child.
- If an individual wishes to invest, they must hold their separate account.
Why PPF is a Smart Investment Choice?:
PPF continues to be a highly rewarding savings instrument, despite the one account rule, because:
- Tax-Free Returns: The interest earned is completely tax-free.
- Section 80C Deduction: Contributions made up to ₹1.5 Lakh per annum are granted tax savings (old tax regime) under this section.
- The government backed that Your Investment is Safe with a Sovereign Guarantee.
- Long-Term Wealth Creation: PPF helps you build a substantial corpus through its 15-year maturity (can be extended in blocks of 5 years).