Public Provident Fund (PPF)

Introduction to PPF Public Provident Fund (PPF) was introduced in India in 1968 to encourage small investments with guaranteed returns. It serves as a long-term investment avenue with tax benefits.

Importance of PPF PPF is favored by risk-averse investors due to its stability and tax-saving advantages. It offers a secure means of accumulating retirement funds.

Key Features of PPF

  • Interest Rate: Presently at 7.1% per annum.
  • Minimum Investment: Rs. 500
  • Maximum Investment: Rs. 1.5 lakh annually.
  • Tenure: 15 years
  • Risk Profile: Offers assured returns and capital protection.
  • Tax Benefit: Eligible for tax deduction under Section 80C.

PPF Account Essentials

  • Tenure: Minimum 15 years, extendable in 5-year blocks.
  • Investment Limits: Rs. 500 minimum, Rs. 1.5 lakh maximum per year.
  • Opening Balance: Rs. 100 monthly.
  • Deposit Frequency: At least one deposit per year.
  • Deposit Mode: Cash, cheque, demand draft, or online transfer.
  • Nomination: Permitted.
  • Joint Accounts: Not allowed.
  • Risk Factor: Minimal due to government backing.

Interest Rate and Calculation Interest is compounded annually at the rate of 7.1% per annum, calculated from the fifth day to the end of each month.

Operational Mechanics PPF accounts can be opened by adults or on behalf of minors, with deposits ranging from Rs. 500 to Rs. 1.5 lakh per financial year.

Eligibility and Account Opening Any Indian citizen can open a PPF account, with only one account allowed per individual.

How to Open a PPF Account PPF accounts can be opened at post offices, authorized banks, or online via internet banking platforms.

Loan against PPF and Partial Withdrawals Loans against PPF balances and partial withdrawals are permitted after the seventh year, subject to conditions.

Tax Benefits PPF enjoys tax-exempt status, with contributions, interest, and maturity amounts not liable to tax.

Closing and Transfer of PPF Accounts PPF accounts can be closed or transferred to another branch or bank as per the account holder’s requirements.

Participating Banks Offering PPF Numerous banks, both public and private, offer PPF facilities to investors.

Additional Services PPF accounts can be linked with Aadhaar for ease of management and verification.

Revival of Inactive PPF Accounts Inactive accounts can be reactivated by fulfilling the minimum deposit requirements and paying applicable penalties.

Conclusion PPF remains a preferred choice for risk-averse investors seeking stable, tax-efficient, and long-term wealth creation avenues.

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