What is PPF?:
PPF or Public Provident Fund tax-free or tax Savings scheme which is introduced by the National Savings Institute of the Ministry of finance in 1968. PPF (Public Provident Fund) is long term investment option that offers an attractive rate of interest and returns in the amount invested. The interest earned on the returns is not taxable under the income tax. The amount deposited during a year will be claimed under section 80C Deduction.
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Features of PPF:
Below are some essential features of Public Provident Fund:
Tenure:
The minimum tenure for PPF is 15 years, which can be extended in every 5 years as per your wish.
Investment Limits:
PPF allows a minimum Investment is ₹500 and a maximum of ₹1.5 lakh For each financial year. Investment can be made lump-sum or in a maximum of 12 installments.
Opening Balance:
PPF account can be opened with just ₹100. Annual Investment of ₹1.5 lakh will not earn interest and not eligible for tax saving.
Nomination:
A PPF account holder can designate a nomination for his/her account either at the time of account opening or later.
Risk Factor:
Since PPF is Backed by The government it offers guaranteed, risk-free return as well as complete money protection. The risk involved in holding in PPF account is minimal.
Loan against PPF:
You can take a loan against your PPF account between the 3rd and 5th years.
Benefits of PPF Account:
- Since PPF is Backed by the government, the principle and interest amount in your PPF account is guaranteed and safe.
- Deposit to the account of up to ₹1.5 lakh per annum and interest earned on the Savings both are tax-free.
- Interest rate For the PPF account is declared by the government every quarter. It must be noted that the interest rate of PPF is higher than FD in many banks in that period.
- PPF account allows you to invest a minimum of ₹500 and a maximum of 1.5 lakh For each financial year. You can make this Investment in Lump-sum or in a maximum of 12 installments.
How to Invest in PPF:
To begin your Investment journey in PPF, You Must first open a PPF account in a Post Office or Bank. The Process to open a PPF account is easy and convenient, you can do either online or offline.
Open PPF Account Offline:
Most of the bank offers the facility to open PPF account online. However, you can open the PPF account offline by visiting your nearest bank branch. Below are a step-by-step guide to open PPF account online:
- Get an application form from the nearest post office from your area.
- Fill up the documents and submit Required KYC documents and passport size photograph.
- The initial deposit required to open a PPF Account is ₹500 and the maximum allowed to initially invest is ₹70,000. However, the maximum Deposit allowed within a year is ₹1.5 lakh.
- Once all documents are submitted with the initial amount l, the applicant will be handed over a passbook for the PPF Account. This passbook contains all the details such as the name of the account holder, PPF account number, branch name etc.
Open PPF Account Online:
If you have a bank account that offers a PPF account, you can open the PPF account online anytime. This process is instant and paperless. Below is a step-by-step guide to open PPF Account Online:
- You must have a Savings account
- You must have Net Banking or Mobile Banking enable for your account.
- Your 'Aadhar Number' should be linked to your account.
- Your mobile number which is linked to your Aadhar should be active, to receive an OTP which is used to e-Sign the opening of the PPF account instantly.
Eligibility Criteria:
Below are eligibility criteria for opening a PPF account in India:
- Any individual who is a resident of India can only open a PPF account.
- NRIs are not eligible to open a PPF account. However, a resident in India who becomes an NRI after opening a PPF account can continue the account till maturity.
- Parents or Guardians can also open a PPF account For their minor Children.
- Opening a joint account and multiple accounts are not allowed.
Document Required:
- PPF Account Opening Form (Form A) which can be obtained from Specific bank branches or can be download online.
- ID Proof (PAN card).
- Address Proof (Aadhar card, Voter Id).
- Photograph of the account holder.
- Nomination Form.
The Government of India guarantee and unmatched tax benefit Makes PPF account one of the safest, attractive and popular long term Investments available.
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