Public Provident Fund – PPF

Public Provident Fund, popularly known as PPF, is a savings cum tax saving instrument. It also serves as a retirement planning tool for many of those who do not have any structured pension plan covering them. The balances in PPF account cannot be attached by any authority normally.

It counts being among the most secure investments you can have in this country. The interest earned on the PPF subscription is compounded; that means you not only earn interest in the money you put in, but you earn interest on the interest earned too. All the balance that accumulates over time is exempt from wealth tax.

A flip side, its an extremely illiquid investment instrument. Its lengthy lock-in period works out to 16 years since the last contribution is made in the 16th financial year. In all, the PPF is a very good savings instrument, and you should consider investing in it.

General Information of PPF

  • The Public Provident Fund Scheme is a statutory scheme of the Central Government of India.
  • The Scheme is for 15 years.
  • Interest Paid: 8%, compounded annually
  • No monthly/yearly payments
  • Minimum investment: Rs 500 (required annually)
    Maximum investment: Rs 70,000
  • Duration of investment: 15 years
  • Cannot be used for such purposes
  • Tax benefit under Section 80 ‘C’ available.
    Maximum limit: Rs 70,000 (limit of the investment in PPF)
  • Good long-term investment option
  • Interest is fully Exempt
Who can open a PPF account?

Any individual can open a PPF account, either for himself/herself or on behalf of a minor. Even if you are a part of a General Provident Fund (GPF) or Employees Provident Fund (EPF) scheme, you can subscribe to the PPF.

Where can one open a PPF account?

You can open a PPF account at any branch of the State Bank of India (SBI), its associated banks, such as the State Bank of Mysore or Hyderabad, or with some other nationalized banks. A PPF account can also be opened at any head post office, selected grade post offices, or a General Post Office (GPO).

As a depositor, you may find it easier to open an account at a post office instead of a bank. Banks may be reluctant to open PPF accounts because they do not earn additional fees to handle these accounts. The money invested in the PPF is credited to the Reserve Bank of India (RBI) the same day. You will be given a passbook where all subscriptions, accrued interest, withdrawals, loans etc. are recorded.
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