Friends, you all have heard about public provident fund. It is popularly known as PPF. It gives you good return even today. There was a time when it used to give 12% Annual return.
It is a very attractive Investment tool for Government employee as, it gives you good return as well as Tax Benefits. You can open PPF account in any Nationalized bank and Post offices in India.
And friends! A very good thing about it that you can open this account in just one day. You need only KYC documents and as minimum as 500 rupees only.
If you are a Government Employee you can avail Tax benefits under article 80C of Income Tax Act 1961. Under this scheme you can invest 1.5 lac in one year and claim tax benefits on it. That`s why it is very popular in Government Employees. You have not to give Taxes either on the Interest or on The maturity Amount.
Central government awards Interest Rates every year for it. The good thing is that we get Compound interest in PPF. The Interest rate is not stable. If Finance ministry finds it fit to be increased, they increase it time to time.
An subscriber can open an account in his or her name but investments should not be more than 1.5 lac rupees in a financial year. One can invest either in lump-sum amount or in the monthly basis. But if you invest in monthly basis then you should deposit your monthly contribution before the fifth of every month. The interest is calculated on the balance amount between the fifth day of the month and end of the month. So, if you deposit your money after the fifth of the month then you lose in terms of interest.
Although there is a lock in period of 15 years for PPF, it does not mean that one cannot get ones money in need. There is a provision to get 25% of balance amount available, from the third to the sixth financial year after opening the account. The taken loan must be paid in 36 months. After paying existing loan you can get another loan. A partial withdrawal is allowed after seven years. so there is full flexibility in this account.
Another feature of the PPF account is very interesting. You can extend your PPF account after the 15 years lock in period with the same interest rate without further contribution. It is extended for five years term in one go.
One thing more about PPF account. If you missed to deposit minimum amount of 500 rupees in a year, your account becomes Dormant. Then you cannot operate your account as usual. If you want to activate your account you have to pay a fine of 50 rupees for every year.
so, friends! I hope this article will be very useful for you.
An subscriber can open an account in his or her name but investments should not be more than 1.5 lac rupees in a financial year. One can invest either in lump-sum amount or in the monthly basis. But if you invest in monthly basis then you should deposit your monthly contribution before the fifth of every month. The interest is calculated on the balance amount between the fifth day of the month and end of the month. So, if you deposit your money after the fifth of the month then you lose in terms of interest.
Although there is a lock in period of 15 years for PPF, it does not mean that one cannot get ones money in need. There is a provision to get 25% of balance amount available, from the third to the sixth financial year after opening the account. The taken loan must be paid in 36 months. After paying existing loan you can get another loan. A partial withdrawal is allowed after seven years. so there is full flexibility in this account.
Another feature of the PPF account is very interesting. You can extend your PPF account after the 15 years lock in period with the same interest rate without further contribution. It is extended for five years term in one go.
One thing more about PPF account. If you missed to deposit minimum amount of 500 rupees in a year, your account becomes Dormant. Then you cannot operate your account as usual. If you want to activate your account you have to pay a fine of 50 rupees for every year.
so, friends! I hope this article will be very useful for you.
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