If you want, you can also open a PPF account for Rs 100. One can deposit a minimum of Rs 500 and a maximum of Rs 1.5 lakh every year. If you want, you can do this investment 12 times in a year. You can also deposit a lumpsum amount in a year.
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Public Provident Fund or PPF is considered as the best means of investment along with savings. This fund is specially designed for those who are hesitant to take risk in investments. With low risk, this fund has the potential to generate substantial returns over a long period of time. The big advantage of PPF is that both its investment and savings get tax exemption. Let us know 5 big benefits of PPF account.
1-Risk Free, Guaranteed Returns
PPF is supported by the Government of India. Therefore, the biggest advantage of PPF is that it is completely risk free. The government also gives a guarantee on the return on its investment. What can be better than this that when it comes to giving money to the lenders, even the court cannot pronounce any decree regarding the funds of this account.
2-Many tax benefits of PPF
The specialty of PPF is in its EEE i.e. exam, exam, exam tax status. Only this investment in India has got the benefit of Triple E tax exemption. Your deposited amount of Rs 1.5 lakh in this account is completely trucks free. Here Triple E means – There is no tax on the money you invest. The interest earned on it is also tax free and the amount received as maturity after 15 years is also not taxable. Therefore, PPF is considered to be the most efficient investment in terms of saving tax.
3-small savings, good returns
There are many types of flexibilities or exemptions regarding the amount of money you have to deposit in PPF. If you want, you can also open a PPF account for Rs 100. One can deposit a minimum of Rs 500 and a maximum of Rs 1.5 lakh every year. If you want, you can do this investment in 12 times in a year or you can deposit money in a lumpsum amount. At present, interest of 7.10 percent is being received from the government on PPF. Earlier its quantity was 7.60 percent. The interest in this account earns compound interest.
4- Withdrawal of money and loan facility
The lock in period of PPF account is 15 years. That is, you cannot withdraw money before the law. But customers can use PPF funds in many ways. You can take a loan against this fund after two years. After two years, up to 25% of the total deposited money can be availed as a loan. However, the loan can be taken up to the completion of two years (at the beginning of the third year) and before 6 years. The loan amount has to be repaid within 36 months. 2% more interest has to be paid on the loan amount than the percentage interest earned on PPF. After the completion of 7 years, you can withdraw some money from the fund.
5- Can extend the period of depositing money
The tenure of PPF account is 15 years. After this period the account matures. The maturity money can either be taken by the customer or he can reinvest it if he wants. The customer gets the facility of investment after 15 years and after 5 years. That is, the maturity money should be deposited for the next 5 years. Now whatever money will be deposited in this account will get interest on it, the maturity amount will also be added to this benefit. In this way an investment of a few thousand can be converted into several lakh rupees.
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