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Public Provident Fund: Features and Benefits of investing in PPF

PPF also known as Public Provident Fund is the schemes started by the central government from year 1968 for the well-being of the people of India. As this scheme was launched for the people’s advantage who made investment by very small amount and they will get more amount at the maturity. This scheme was backed by Central government so there is no risk of loss of money & you will get guaranteed returns.

PPF is a kind of investment for long term and having the maturity period of 15 of years from the date of opening the account. In case of necessities we can withdraw partial amount after 5 years from the date of opening the account. At the end of every financial year the interest amount (Interest on PPF balance is calculated every month) is credited to the PPF account

PPF investors are advised to make contributions to their PPF account before the 5th of each month. Interest is calculated from the 5th of that month till the end of that month on the lowest PPF balance amount. That’s why it is always be advised to start PPF account at the start of financial year.

If an individual has not been invested in PPF account in any year then PPF account may be deactivated from that year. An individual need to pay Rs 50 per year till the year of activation of account as a form of penalty to reactivate the PPF account.

We can open PPF account either authorized banks or in post office only. Nowadays we can also open PPF account through online banking also.

What are the Benefits of investing in Public Provident Fund?

  1. We can start investing in PPF with low amount also, investing start as low as Rs 500 in a year in PPF and the maximum amount of Investment could be INR 1, 50,000. So lower middle class family can take advantage from this scheme.
  2. The money invested in PPF in a financial year gets exempted from taxable income of an individual under section 80C of the income tax act 1961. And the interest earned on PPF deposits along with the accumulated amount of Principal amount does not have any tax liability when it’s get matured.
  3. We can also get loan from PPF account from the 3rd financial year up to the 6th FY from the date of opening the account. You can also approach for the second loan, but it can be obtained only after the closure of the first loan.
  4. A PPF account after the maturity of 15 years can be extended in the blocks of 5 years. We can withdraw 60% amount from the PPF account if we need then and balance amount can be extended for the block of 5 years.