Exploring PPF - Public Provident Fund: A Comprehensive Guide

Understanding PPF

The Public Provident Fund, commonly known as PPF, is a popular investment choice celebrated for its investor-friendly features and benefits. It serves as a long-term investment avenue, attracting those who seek stable and high returns while ensuring the safety of the principal amount.

Importance of a PPF Account

The Public Provident Fund scheme is especially suitable for individuals with a low-risk appetite. Mandated by the government, it ensures assured returns and remains immune to market volatility, making it a secure choice that offers consistent annual returns, especially during economic downturns.

Features of a PPF Account

• Interest Rate of PPF: 7.1% per annum
• Tax Benefit: Up to Rs.1.5 lakh under Section 80C
• Risk Profile: Guarantees risk-free returns
• Minimum Investment Amount: Rs.500
• Maximum Investment Amount: Rs.1.5 lakh annually
• Tenure: 15 years, extendable by 5 more years
• Principal Amount: Minimum Rs.500; Max Rs.1.5 lakh annually
• Loan Against Investment: Available from the 3rd year to the 6th year. Maximum tenure: 36 months; Loan amount up to 25% of the balance
• Eligibility Criteria: Indian citizens, including minors with parental operation. NRIs not eligible for new accounts.
• Interest in a PPF Account: 7.1% rate, with quarterly revisions

How to Open a PPF Account?

Opening a PPF account can be done offline or online. Online activation entails visiting a bank or post office's website. Required documents include KYC, PAN card, address proof, nominee declaration, and photos.

PPF - Tax Benefits

PPF accounts enjoy income tax exemptions on both the principal and interest earned. Investments up to Rs.1.5 lakh annually qualify for tax exemption under section 80C of the Income Tax Act, 1961. The interest earned is also tax-free.

Withdrawal

PPF accounts have a mandatory 15-year lock-in period. Partial withdrawals are allowed for specific purposes after 5 years. Annually, up to 50% of the balance can be withdrawn from the 4th year onward.

Loan Against PPF Scheme

A loan is available between the 3rd and 5th years of a PPF account, capped at 25% of the balance from the second year.

Procedure to Withdraw PPF Money

For withdrawals, complete Form C and submit it to the branch. The form includes sections for personal details, office use, and bank information for direct credit or cheque issuance.

In conclusion, the Public Provident Fund (PPF) offers a secure and advantageous long-term investment option, providing stability, tax benefits, and flexibility in loans and partial withdrawals. It remains a compelling choice for those seeking assured returns and tax savings.