PPF offers a fixed rate of return, which makes it ideal for those investors who don’t wish to assume any risk. If capital protection is of utmost importance for you, then investing in PPF is a viable option. The market fluctuations do not have a direct impact on your PPF investment. As the scheme comes with a mandatory lock-in period, it lets you robustly plan your financial goals. You can calculate the corpus accumulated by your PPF account at any point in time using a PPF calculator.
Features of PPF
The following are the key features of the Public Provident Fund:
- Lock-in period: PPF comes with a mandatory lock-in period of 15 years. Upon maturity, you can extend your account over a block of 5 years.
- Number of accounts: You are allowed to open only one PPF account. You may open a PPF account on behalf of your minor children. Non-resident Indians are not allowed to open a new account. If you were a resident Indian and your residence status changed during the tenure, your account remains active until the tenure completes. Such accounts cannot be extended.
- Investible amount: You cannot invest more than Rs 1.5 lakh a year into your PPF account. This limit can be exhausted through a one-time lump-sum or spread over a maximum of 12 deposits. A minimum investment of Rs 500 a year is required.
- Assured returns: The scheme provides you with an assured rate of returns. The interest on PPF is revised quarterly by India’s Government, and it is always much higher than bank deposits.
- Taxation: PPF is one of the few investments that come with exempt-exempt-exempt (EEE) tax status. The principal invested, maturity proceeds, and interest earned is made tax-exempt.
Benefits of Investing in PPF
The following are some of the benefits of investing in PPF:
- Under Section 80C, you can claim tax deductions of up to Rs 1.5 lakh a year. This translates into tax-savings of up to Rs 46,800 a year.
- Your investment is safe as market fluctuations have no direct impact on them, and the scheme provides assured returns.
- PPF is an excellent investment option to realise long-term financial goals. You can use a PPF maturity calculator to estimate the maturity proceeds of your PPF investment.
- Premature withdrawals and loans against PPF are allowed to meet certain conditions.
How to Open a PPF Account?
PPF is offered by post office branches spread across India and authorised banks. You are required to furnish valid ID and address proof along with a photograph in the prescribed format. You may open a PPF account online by logging on to the authorised bank’s official website and filling the online application form. Alternatively, you may also visit a post office branch or authorised bank and submit an offline application form with the required documents.
