Talk about tax saving schemes and the first thing you hear is PPF. Being an investment vehicle, Public Provident Fund is a popular long-term savings scheme backed by the Government of India.
It first came into existence in 1968. Basically to promote small savings among the general public. However, it has since become a go-to investment option for many Indians looking to save for their future.
What is Public Provident Fund?
PPF is a savings scheme that allows investors to deposit money in their PPF account for a period of 15 years, with the option to extend it for another 5 years. The scheme is backed by the Government of India and offers tax benefits to investors. The current interest rate on PPF is 7% per annum (as of March 2023).
Why should you invest in Public Provident Fund?
- Tax benefits: The amount deposited in a PPF account is eligible for tax deduction under Section 80C of the Income Tax Act. The interest earned and the maturity amount are also tax-free.
- Guaranteed returns: The interest rate on PPF is fixed by the government and is currently at 7.1%. This makes it a safe investment option with guaranteed returns.
- Long-term investment: PPF has a lock-in period of 15 years, which makes it a great long-term investment option for individuals looking to save for their future.
- Flexibility: PPF allows investors to make partial withdrawals after the completion of the 7th year of the account. The investor can also take a loan against their PPF account after the completion of the third year.
- Transferable: A PPF account can be transferred from one post office/bank to another, and can also be transferred to another person in case of the death of the account holder.
How to open a Public Provident Fund account?
A PPF account can be opened at any post office or authorized bank branch. Some banks also offer the facility to open a PPF account online. To open a PPF account, you need to fill up an application form, provide your KYC details, and deposit a minimum of ₹500. You can then deposit a maximum of ₹1.5 Lahks per year in your PPF account.
Conclusion:
Public Provident Fund is a safe and reliable long-term investment option that offers tax benefits to investors. It is a great way to save for your future and provides guaranteed returns. If you are looking to invest in a scheme that provides long-term benefits, then PPF is an excellent option to consider.
