If someone has some free cash which needs to be invested in some asset class, there is no doubt in my mind that PPF would come across his mind first. One, it offers attractive interest rates, almost rivalling bank deposit rates and two, every rupee you earn in return is completely tax free; which is unlike the interest you earn from fixed deposits.
Both the interest rate and maximum deposit amount per year are subject to revision by the Central Government every year.
So, the next question comes, where should one open a PPF account. There are only two option here, either Post Offices or Banks’. Earlier, only Public sector banks’ were authorized to offer PPF accounts but now even Private sector banks operate PPF accounts. The interest rate on a PPF account is offered by the Central Government; banks’ or PO’s are just the middlemen between us and the Government. So as you may understand, there is no financial benefits if you open PPF account in either banks’ or Post Offices.
But, there is definitely some functional benefit if you have your account in a Bank. Read below:
Online PPF Account Balance & contribution
Suppose you open a PPF account in a branch of SBI where you already have a savings account with Internet Banking facility. You can link your PPF account to the user ID of your savings accounts internet banking so that you can see your PPF account online, in your Internet banking account.
Post Offices don’t have internet facilities, so for every other necessity, you will have to visit the PO and get the work done.
On the other hand, having the account in a bank, SBI in this case, you can see the balance in your PPF account whenever you want and also contribute to your account when ever you want. Contributing to PPF online is similar to making funds transfer to any other account. In our example, your PPF account will be shown under your ‘Own Accounts’ in the same SBI branch. There is also no fee for PPF contribution. But do remember that your contributions must follow the rules of PPF account (not exceed 12 number of contributions in a year and total amount should not exceed the limit applicable for that year).
Download PPF e-receipt
If you have made a PPF contribution via your internet banking, you can also download a e-receipt for your contribution. Look for the link in the left menu (remember that in this post we are considering you have a PPF account in SBI; if you don’t some features may not be available to you). This receipt may be useful to you for filing your Tax returns.
There are a few things that you cannot do online yet.
You cannot withdraw funds from your PPF account. You have to download this withdrawal form and submit it your branch.
You cannot add or change your nominee online. You should use this form and submit it to your branch.
You cannot close the PPF account.
Note: Only the branch can link your savings account with your PPF account so it is imperative that you contact your branch. They might tell you that it’s not possible, but many people (including me) already have linked their accounts.