Public Provident Fund (PPF) is a popular investment scheme offered by the Indian government to encourage savings among citizens. It is a safe and secure investment option that provides attractive returns along with tax benefits. In this article, we will provide a detailed guide on PPF account, its features, benefits, eligibility criteria, and the process to open and manage the account.
Table of Contents
Understanding PPF Account: What is it and How it Works:
PPF Account is a long-term investment scheme offered by the Indian government. It is a type of savings account that allows individuals to deposit money and earn interest on it. The scheme has a lock-in period of 15 years, and the interest earned is tax-free. Individuals can also claim tax benefits on the amount deposited under Section 80C of the Income Tax Act.
Features and Benefits of PPF Account:
Some of the key features and benefits of PPF Account are:
- Minimum Deposit: The minimum deposit amount for PPF account is Rs. 500, and the maximum deposit limit is Rs. 1.5 lakhs per annum.
- Interest Rate: The current interest rate on PPF account is 7.1% per annum, which is compounded annually.
- Tax Benefits: The amount deposited in PPF account is eligible for tax deduction under Section 80C of the Income Tax Act. Moreover, the interest earned and the maturity amount is tax-free.
- Loan Facility: Individuals can avail of a loan against their PPF account from the third financial year to the sixth financial year of opening the account.
- Partial Withdrawal: Individuals can make partial withdrawals from their PPF account after the completion of the sixth financial year from the date of opening the account.
Eligibility Criteria to Open a PPF Account:
To open a PPF account, individuals need to fulfill the following eligibility criteria:
- Citizenship: Only Indian citizens can open a PPF account.
- Age: Individuals above 18 years of age can open a PPF account in their name.
- Number of Accounts: An individual can only open one PPF account in their name.
How to Open and Manage a PPF Account:
Here are the steps to open and manage a PPF account:
- Visit a bank or post office authorized to offer PPF account services.
- Fill the PPF account opening form and submit it along with the required documents such as ID proof, address proof, and photograph.
- Make the initial deposit of at least Rs. 500.
- Activate the account by linking it to your bank account.
- Manage the account by depositing money, checking balance, and making partial withdrawals, among others.
PPF Account vs Other Investment Options:
PPF account offers several advantages over other investment options such as fixed deposits, mutual funds, and National Savings Certificate (NSC). PPF account provides a higher interest rate, tax benefits, and a longer lock-in period, making it a more attractive investment option.
Conclusion:
PPF Account is a safe and secure long-term investment option that provides attractive returns along with tax benefits. Individuals can open a PPF account in authorized banks or post offices and manage it easily. PPF account offers several advantages over other investment options, making it a preferred choice for many investors.
