What is PPF Account | Benefits of Investing in PPF | How to Invest In PPF
There are many saving scheme instruments like National Saving Scheme NSC, Employee Provident Fund EPF, Senior Citizens Savings Scheme SCSS, Public Provident Fund PPF which offers guaranteed returns an still people have lot of confusion about PPF. Here we will provide you detail information about PPF.
Public Provident Fund
Public Provident Fund is a central governments saving scheme established in 1968.lot of people turn to this scheme because it offers its annual compounding, yearly tax exemptions on withdrawal and on contribution, this makes it as a safest investment scheme. This scheme is good for retirement as the investment is long term. The tenure of investment is for 15 years with rate of interest of 7.6 % (present) compounded annually and the central government changes its interest rate every quarter. Interest will be paid every year on 31 March.
Some of the important features of Public provident funds are listed below.
Any individual who is Indian resident can only open this account himself.
Minor cannot able to open PPF account on its own but with the help guardian or parents he/she can open it.
The Tenure of this scheme is for 15 years that means you have to deposit the amount for 15 years and you will get maturity amount after 15 years.
Individual can open the PPF account in post office or in any nationalised bank and remember an individual can open only one account no joint account is allowed.
In PPF you can deposit minimum amount of 500 Rs per financial year and you can deposit maximum of 150000 Rs per financial year.
In PPF you can deposit monthly, quarterly, half yearly or annually depending upon your comfort.
You can also deposit fixed amount yearly or you can also deposit variable amount.
In PPF you can deposit minimum 1 time and maximum 12 times per financial year.
The PPF account will be in-active if you not deposit minimum amount and you will not get any interest for the amount also. if you want to reactivate it you have to pay fine of 50 Rs for each financial year of deposit and arrear amount of Rs 500 for each financial year.
With investment in PPF you can get return of 7.6 % (present) which is completely tax free.
As PPF account is for 15 years, you cannot withdraw the amount before 15 years nor can you close it before 15 years but in certain genuine cases like serious illness and for education of children you can withdraw it but account should be 5 years old than only you can withdraw it and with a penalty of 1% per financial year.
You can withdraw the amount after 15 years or you can extend it for another 5 years. You can withdraw partial amount after 7th financial year but you can withdraw only one time per financial year.
Investing in PPF you can get benefit of tax exemption under the section 80C.
The interest earned in PPF will be tax free and the maturity amount what you get after 15 years will also be tax free.
Non resident Indian is not eligible to open PPF account and in case if you had opened PPF account and later turned NRI you can still get maturity amount after 15 years but you cannot extend it for another 5 years nor you can open new PPF account.
You can open the PPF account in bank website or post office website directly.
Remember if you deposit amount at the start of financial year then you can earn more interest than depositing the amount at the end of financial year.
Suppose if you are planning to deposit yearly than depositing the amount on the first week of April will earn more interest.
If you are planning to deposit monthly then depositing the amount before the first week of every month will get you more interest.
If you are planning to deposit quarterly then depositing the amount before the first week of April, October and January will get you more interest.
If you are planning to deposit half yearly then depositing the amount before the first week of April and October will get you more interest.
You can get loan facility from PPF account from 3rd financial year to 6th financial year of opening an account.
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