What is a PPF account?
The Public Provident Fund (PPF) account is one of the most popular long-term investment plans due to its excellent combination of security, attractive interest rates, return on investment and tax savings. In 1968, the National Savings Institution of the Ministry of Finance introduced the PPF account, a public provident fund, as an excellent investment option. The scheme has the full support of the Government of India. These features made it a popular choice. Under this scheme, the investor gets facilities like taking out a loan, withdrawing money for needs and increasing the account.
Who can open a PPF account?
Any resident Indian individual can open a PPF account can be opened on behalf of the Minor, but they can only be managed by the parent For the opening of a PPF account requires Form A, Passport size photos and KYC (PAN CARD, AADHAR CARD, ADDRESS PROOF).
One person can open a single PPF account.
An NRI person cannot open a PPF account. But if a person opened a PPF account before becoming an NRI, that person can manage the account for 15 full years, but cannot extend it.
Why so much popularity about PPF?
PPF is one of the safest investment schemes. Because the Government of India itself guarantees your investment. The government sets interest rates on a quarterly basis. Under Section 80C of the IPF Act, your investment is tax-deductible and the benefit from PPF is not taxable.
Features of PPF accounts
- You have to deposit at least Rs. 500 and a maximum of Rs. Can invest 1,50,000 in a financial year.
- With the full support of the Government of India on this scheme, your entire savings are safe.
- The minimum tenure of PPF is 15 years. But the account can be extended for a block period of 5 years after maturity if you wish
- PPF accounts are fully exempt from income tax under Section 80C
- Parents can open a PPF account in the name of their ignorant children and also get tax relief.
- You can take a loan on your PPF account between 3rd and 6th year.
- The court cannot seize the PPF account in any way.
- You get interest on a monthly compounding basis.
- You can also transfer your PPF account from one bank to another financial services.
Limitation of PPF accounts
- If you fail to invest at least 500 in a PPF account in a financial year, your account becomes inactive. But you can reactivate a PPF account with some procedures.
- Only 50% of the amount deposited up to 4 years after 7th year can be withdrawn for emergency only. There are also some conditions that at least 5 years must be completed.
- You can close the PPF account for higher education of the account holder or you can close the PPF account only if there is a situation like Sirius Illness of Family Member.
- You may be charged 1% for closing your account prematurely.
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