Table of Contents
Introduction
Public Provident Fund, is an outstanding choice for a secure investment. we can begin with a small initial investment by opening a PPF account at a bank or post office. A minimum of Rs 500 and a maximum of Rs 1.5 lakh can be deposited yearly.
The current PPF interest rate is 7.10 %. The PPF interest rate is expected to rise in the September quarter. The government has changed its rules in recent years.
What is PPF.?
The PPF account or Public Provident Fund scheme is one of the most popular long-term saving-cum-investment products, mainly due to its combination of safety, returns, and tax savings.
The PPF was first offered to the public in the year 1968 by the Finance Ministry’s National Savings Institute. Since then it has emerged as a powerful tool to create long-term wealth for investors.
Investors use the PPF as a tool to build a corpus for their retirement by putting aside sums of money regularly, over long periods of time (PPF has a 15-year maturity, and the facility to extend the tenure). With its attractive interest rates and tax benefits, the PPF is a big favorite with a small saver.
Features of the PPF Account
- You can invest a minimum of Rs. 500 and a maximum of Rs. 1,50,000 in a financial year.
- A PPF has a minimum tenure of 15 years. You can extend it in blocks of 5 years if you wish.
- Any Indian citizen can open a PPF account.
- You can take a loan on your PPF account between the 3rd and 5th year and make partial withdrawals after the 7th year for emergencies only.
- You can open a PPF account with just Rs. 100 with any recognized You can make deposits every month or in a lump sum through cash, cheque, DD or online transfer.
- The PPF accounts cannot be held jointly, though you can make a nomination.
- You must compulsorily make a minimum deposit of Rs. 500 every year.
Rules that the Government has changed in the quarter
Rules for money deposit in PPF account
The investment in the PPF account should be in multiples of Rs 50. This amount should be at least Rs 500 or more yearly. You can deposit up to 1.5 lakhs in the PPF account during the entire financial year. you will get the benefit of tax exemption. Apart from this, money can be deposited in a PPF account once a month.
The interest rate on loans
A loan can also be taken against the balance in the PPF account. This interest rate has been reduced from 2 percent to 1 percent in the last few days. After paying the principal amount of the loan, you will have to pay the interest in more than two installments. Interest is calculated on the first of every month.
Account will be active after the maturity period
After investing in PPF for 15 years, if you are not interested in investment, then you can continue with the PPF account even without investment. It is not necessary to deposit money in this account after the completion of 15 years. You can withdraw money only once in a financial year by opting to extend the PPF account after maturity.
Form 1
To open a PPF account, Form 1 has to be submitted instead of Form A. For extension of the PPF account after 15 years (with deposits) one year before maturity, one has to apply in Form-4 instead of Form H.
Loan on PPF
The rule of taking a loan against a PPF account is that you can get a loan up to 25 percent of the total balance in your account 2 years before the date of application. That is, applied for the loan on 31 August 2022. Two years before this (31st August 2020), if 1 lakh rupees in your PPF, then you can get 25 percent of it i.e. up to 25 thousand rupees.