Are you looking for a secure investment alternative with smart returns that are completely exempted from Income Tax then a Public Provident Fund account is one of the best option. Public Provident Fund is basically a long - term, government backed small savings scheme of the Central Government initiated with the purpose of offering old age income safety to the workforce in the unorganized sector and self employed individuals as they do invest in Employee Provident Fund. Public Provident Fund is an ultimate tool for long term investment in the debt type, a significant retirement saving tool for individuals, more specifically for those who are not wa PPF interest can be computed by any calculator. It can even be computed by math mixed fraction calculator which can calculate a lot of amount in less than a fraction of time.ged employees.
The Public Provident Fund Scheme, 1968 is generally a tax - free savings prospect that was initiated by the Ministry of Finance, India in the year 1968. Interest made on deposits in the PPF account is generally not taxable. Deposits in Public Provident Fund accounts can be maintained as tax subtractions. This makes the Public Provident Fund Scheme one of the most tax efficient instruments in India. It was commenced to persuade savings among Indians in general, particularly to influence them to open a retirement corpus.
Public Provident Fund (PPF) Accounts
One can deposit funds in Public Provident Fund accounts for a preset tenure of time to earn returns on their savings. The PPF of interest rate for the financial year 2017 - 18 is 7.8%.
Given that this scheme was commenced to promote savings across income groups, minimum deposit needs are very little and reasonably priced. They are also tax-free accounts, simply accessible, secure and easy to understand.
Public Provident Fund accounts can be opened at any nationalized, authorized bank and authorized branches / post offices. Public Provident Fund accounts can be opened at specific private banks as well. Interest rates are set and declared by the government of India. Interest is calculated for a financial year in accordance to the rate declared for the said year. Unlike bank Fixed deposits the rates are not set for the complete term of the holding. The period from 1st of April to 31st of March, or so to say a financial year is regarded as to be a deposit year for a Public Provident Fund account.
Main Highlights of the Public Provident Fund Scheme are as follows:
- Interest rates: Interest rates are declared by the government time to time, mainly annually. Interest made is compounded every year.
- Tenure: The tenure is fifteen years. Account maintenance is approved further than maturity for 5 years at each renewal, with or without further deposits.
- Initial deposit: You need to deposit Rs.100 to open an account.
- Yearly Deposit amount: You need to deposit Rs. 500 - Rs.1.5 lakh every year.
- Deposit occurrence: A deposit has to be made each year for fifteen years to maintain the account. If one is not able to maintain minimum annual investment, it will make the account inactive.
- Deposit methods: The deposits can be done through cash, cheque, PO, DD, online funds transfer; one-time deposit or up till 12 installments.
- Withdrawals: Partial premature withdrawals can be made every year from the seventh year. Entire withdrawal of funds can be done only at maturity.
- Tax benefits: Interests are tax- free and deposited amounts are tax deductible.
- Nomination: Nominations are permitted on opening the account and even post that.
- Fund transfer: Funds can't be transferred to people but can be easily transferred between bank branches or post offices for free.
- Loan service: Loan can be availed in opposition to funds held in the Public Provident Fund account from the 3rd year to the 6th.
- Renewal: Rejuvenation or extension of the scheme is permitted, for an additional 5 years time.
- Joint accounts: Joint accounts are not permitted.
Advantages of Investing in a Public Provident Fund Scheme:
- Smart long-term investments: Through a deposit time of 15 years and a lock - in period of 7 years, such accounts facilitate long - term investment objectives.
- Helpful for retirement planning: Long time duration, compounded, tax - free returns and capital shield make this the best option for making a retirement corpus.
- Tax - free returns: Tax - free interest and withdrawals and tax - deductible investments are present.
- Low - risk: As it is government account, there is no risk of default.
If you're not sure where to start or how to open PPF account, then you can contact us.
Note : Please advice us if you found any error or if you have any suggestions.
Disclaimer: We do not offer any financial advice. This is just a tool to get rough idea of return on investment on PPF. The actual returns may be lower or higher depends on the market. We do not guarantee the result. PPF are different so please contact your financial consultant for better return before investing. This site is just for information purpose only.