PPF Investment – Everything you should know
Public Provident Fund (PPF) is an investment scheme backed by the Indian Government which offers interest rates and returns that are 100% income tax exempted. Investors can avail facilities such as withdrawal, loans and extension of account. PPF is available at almost all banks and post offices.
Eligibility for opening a PPF Account
Any Indian Resident can open a PPF account.
Here are some points that you should know:
- Joint Ownership is not allowed for PPF investment
- A Minor is eligible to start a public provident fund investment with a guardian (mother/father/court-appointed guardian)
- Multiple PPF accounts cannot be made
Features of a PPF Investment
- PPF Interest Rate of 7.6% can be earned which is fully exempted from Income Tax
- PPF Investment Limit: A minimum yearly deposit of Rs. 500 is mandatory to start a PPF account. If an account holder wishes to increase his yearly deposit, he can deposit a maximum of Rs. 1,50,000 in his account per financial year
- Deposits can be made in maximum 12 transactions
- The minimum duration is 15 years which can be extended indefinitely in blocks of five years
- You can apply for a loan between 3rd to 6th financial year
- Partial withdrawal can be done after the 7th financial year
- In case of the death of the Account Holder, the nomination facility can be availed to name one or more people to withdraw the PPF amount, or else the amount will be paid to the legal heir.
Premature closure of PPF account is also possible after the completion of 5 years. This is permitted in case of a medical emergency or funding the higher education of the PPF account holder. It is important to remember that premature closure comes with an interest rate penalty of 1%.
How to invest in PPF
You can open a PPF account either by going online on to the bank’s website or by visiting the post office or bank. You will need to provide several documents such as bank details, photo id proof, photographs and address proof to start the process.
Loan facility can be availed against the PPF from the 3rd to 6th financial year of the opening of the account. A loan of worth 25% of the total fund can be availed. The interest rate for the loan against PPF is 2% above the rate of interest of PPF.
The EPF investment (Employee Provident Fund) is different from a PPF investment. EPF is a retirement-benefit scheme that is available only for salaried employees whereas all Indian Citizens can avail PPF.
Every individual should make use of PFs investments. These investments are one of the best tools where you can invest your money safely. Provident Fund Investment helps in providing a sense of financial security among investors.