Public Provident Fund: 5 facts you must know about PPF
PPF savings is one of the secured investments. The return from the scheme is an assured sum after certain years.
Public Provident Fund or PPF was introduced to mobilise small savings. The scheme offers a long-term investment option, decent returns coupled with income tax benefits. PPF savings is one of the secured investments. The return from the scheme is an assured sum after certain years. Therefore, risk-averse investors, and senior citizens often choose this scheme. A PPF account is opened for a duration of 15 years. However, investors can extend it by 5 years and multiple times.
Here are some of the facts about PPF that every investor must know:
1. Investment limit: An investor can put a minimum of Rs 500 and a maximum of Rs 1,50,000 per annum. If a subscriber deposits more than Rs 1,50,000 per annum, the excess amount will neither earn any interest nor be eligible for rebate under Income Tax Act. The amount can be deposited in lump sum or in a maximum of 12 installments per year.
2. Interest rate: The rate of interest of this scheme is revised by the government every quarter. Currently. PPF interest rate stands at 8 percent per annum. Interest is calculated on the minimum balance (in PPF Account) between 5th day and end of the month and is paid on March 31 every year.
3. Tax benefits: In PPF, income tax benefits are available under Section 88 of the I-T Act. Interest income from the scheme is exempt from income tax. Amount outstanding to the credit is fully exempted from wealth tax too, according to the information available on SBI website.
4. Policy duration: The duration of a PPF policy is 15 years. However, the subscribers can extend it for 1 or more blocks of 5 years each. Premature payment is allowed only after the account or the account of the minor account holder of whom he/she is the guardian has completed five financial years.
5. Eligibility: Individuals can open PPF account in their own name or on behalf of a minor. As per extant instructions, opening of PPF accounts in the name of Hindu Undivided Family is not permitted.