Public Provident Fund or PPF scheme operated by the government provides a dynamic combination of high returns, safety, and tax-saving benefits. PPF is currently one of the best options in India if you're planning to save and invest for your retirement.
The interest earned on PPF investment is associated with 10-year government bonds and keeps changing on a regular basis. Currently, the PPF interest rate is 8% in India. The interest is compounded annually to help investors earn high returns. PPF has the benefit of EEE (Exempt-Exempt-Exempt) tax status and also all the gains you earn until the completion of maturity is tax-free.
Now that you have a fundamental idea of PPF account benefits; let us take a look at some critical PPF rules and how to open PPF account-
Important PPF Rules
- Eligibility-Provident fund schemes like EPF and VPF are only available for salaried employees, whereas, a PPF account can be opened by any Indian citizen. The account can either be in your name or in the name of a minor.
- Maturity-As per PPF rules, you will have to remain invested in the scheme for at least a period of 15 years. On completion of this period, you will have the option to extend the scheme further in blocks of 5 years.
- Account Transfer-PPF scheme also allows account transfer. This means that you will be able to switch between bank branches, banks, and even post office to a bank or vice versa.
- Investment Amount-In a financial year, you may invest a minimum amount of Rs. 500 and a maximum of Rs. 1.5 lakhs. The amount can either be a lump sum investment or it can be divided into a maximum of 12 instalments.
- Taxation-According to PPF deposit rules, investments up to the sum of Rs. 1.5 lakhs in PPF in a financial year will be eligible for tax deductions under Section 80C of the IT Act.
- Partial Withdrawal-From the 7th financial year of PPF account opening, you will have the option to withdraw a partial amount from the scheme.
- Loan-You can avail loans between the 3rd and 6th financial year of investment. Once you complete 3 years, you can withdraw up to 25% of the invested amount. After the loan is repaid, you can take another credit before the end of the 6th
How to open a PPF Account?
To open a PPF account, you may visit any branch of a reputed bank or post office. Moreover, most of the banks will permit you to open PPF account online provided that you already have an account in the bank. After opening the PPF account, you can start investing money in the PPF account through cheque, cash or online transfers.
Plan your retirement with PPF
In comparison to many other investment options, PPF benefits are one of the best. Several things such as tax savings, impressive returns, government-backed security and loan facility make PPF a must-have for every individual who is serious about their retirement planning.
As PPF account can now be opened online; you can visit the official website of your bank to know the details. This can be your first step towards a financially independent retirement.