PPF account interest rate: Make money without risk, check how Public Provident Fund helps you
PPF account interest rate: A popular scheme among investors, PPF offers a triple tax benefit; On a downside; account can be opened with a minimum of Rs 500 per year
PPF account interest rate: Public Provident Fund is a very popular tax saving scheme among investors. The investment scheme falls under the EEE category which offers a triple income tax benefit to investors. The scheme gets tax exemption under Section 80 C of the Income Tax Act. There is no tax on investments up to Rs 150000.
However, with the PPF scheme, the investor does not have too much liquidity as the withdrawal facility is available only in the 7th year. One can apply for the loan against the investment scheme between 3-6 years. It is not a great option to hedge against inflation. The government reviews interest rates on a quarterly basis. The interest rates are fixed on the basis of bond yield. The current interest rate is 7.90% on the PPF.
The PPF account can be opened with a minimum amount of Rs 500. There is a yearly limit on investment at Rs 150000. You can deposit money several times in a year but it should not cross the limit of Rs 150000. Investments can be made multiple times in a month. Initially, there was a rule for a one-time payment. To open a PPF account Form 1 is required instead of Form A.
The investors will have to put at least Rs 500 in a financial year, failing which the account will get closed. You will not be allowed to apply for a loan or withdraw money in such a situation. The account can be reopened by paying Rs 50+Rs 550 for every year of closure.
The maturity period for PPF is 15 years. After maturity, it is possible to seek an extension of the scheme. The duration can be extended for a period of five years. After the maturity period, it is necessary to deposit once within a year. You can continue to park the money in the PPF account after the maturity period. You can withdraw money once in a year from your account.
You will be able to close the account If your address changes. The PPF account can be closed even in a premature state. Copy of passport, visa and ITR information mandatory. Initially, there was a provision of closing the account only on some special conditions. You can close the account only after 5 years of opening it. There is a provision of medical treatment for your family members. You can also withdraw money fro the education of your children. You will have to show important documents to close the accounts.
Money withdrawal only after the maturity period. The provision of partial withdrawal allowed on certain conditions. You van withdraw money up to 50% for the first four years.
The interest rate on loan against PPF balance was 2% which has now been reduced to 1%. The account holders can pay the loan amount within 36 months. The interest will be 6% on defaults.
You can open an account in the name of a minor or open a joint account. Only one account can be opened per name. The non-resident Indians cannot open a PPF account. If you have opened an account before becoming NRI then you can retain the account till the time of maturity.
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PPF Rules for HUF or Hindu Undivided Family. HUF can contribute in the PPF. PPF is applicable for one or more people. The overall tax rebate is up to Rs 1.5 lakh. After the closure of HUF the fund will be distributed between the members.
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