kriThe Public Provident Fund (PPF) program is a long-term investment option with a competitive rate of interest and returns on investment. The goods and returns earned are not taxable under the Income Tax Act. Under this system, one must create a ppf account, and the amount deposited during the year will be claimed under section 80C deductions.
Key characteristics of the Public Provident Fund (PPF)
- The PPF has a minimum of 15 years, which can be extended in 5-year increments if desired.
- PPF permits a minimum investment of Rs 500 and a maximum investment of Rs 1.5 lakh per financial year. Investing can be done in a flat sum or over 12 months.
- The account can be started with just Rs 100 as an opening balance. An amount higher than INR 1.5 lakh per annum would not earn interest and will not be eligible for tax benefits.
- Deposits into a PPF account must be made at least once a year for 15 years.
- Deposits can be made in a PPF account via cash, check, demand draught (DD), or an online fund transfer.
- Nomination: A PPF account holder can name a candidate for their account either when the account is opened or later.
- Joint accounts: A PPF account can only be held in one person’s name. It is not possible to open a joint statement.
- PPF offers guaranteed, risk-free profits and total capital protection because the Indian government backs it. The risk associated with owning a PPF account is negligible.
The significance of having a Public Provident Fund account
- A PPF account is one of the most influential investment options for those with a minimal risk appetite.
- The PPF is a government-backed scheme with no market-linked investment. As a result, it provides guaranteed returns, ensuring that many people’s financial needs are met.
- PPF accounts are a diversification technique for an investor’s portfolio because the returns are fixed. It can help you save money on taxes.
How can you start a PPF account?
A PPF account can be opened at any Post Office or any nationalized bank, such as the State Bank of India, or other private banks such as ICICI, HDFC, and Axis Bank, among others, are now authorized to provide this service.
What is the PPF interest rate?
The current yearly compounded interest rate is 7.1 % per annum. Every year, the Finance Ministry sets the interest rate due on March 31st. Every month, interest is calculated on the lowest balance between the fifth and last days of the month. Additionally, you may use our PPF calculator to determine the expected returns on a specific amount invested in a PPF account.
Withdrawal from the Public Provident Fund
Generally, one can withdraw the entire balance of a PPF account only after the account reaches maturity after 15 years. You can use a ppf calculator to calculate your total amount.
After 15 years, an account holder’s entire balance in the PPF account, including earned interest, can be withdrawn freely and the account closed. However, if account holders require funds sooner than 15 years, the system allows partial withdrawals beginning in year 7, i.e., after completing six years. Follow our website to learn more.