Public Provident Fund (PPF) is one of the most popular small savings schemes. If it is compared with other equivalent schemes, then it gives relatively better interest. Its interest rate is fixed by the government every quarter. At present, the interest rate on PPF savings account is 7.1%. PPF comes in small savings deposits. Along with the post office, nowadays PPF account can also be opened in a bank. Due to the compounding, this scheme has its own advantage and also provides tax relief on the income. An individual can invest up to Rs 1.5 lakh per year in a PPF account.
The investment you make in PPF earns interest and gets added to your principal. Next time you get interest on the interest linked principal and thus you can take advantage of compounding interest. It comes under EEE i.e. Exempt, Exempt, Exempt category. It comes with the benefits of fixed income and taxation.
Who can invest
Anyone can invest in PPF. This account can also be opened in the name of a minor. One can invest a minimum of Rs 500 and a maximum of Rs 1.5 lakh in a year. The investment in this fund should not exceed Rs 1.5 lakh in a year in the name of any individual. NRIs, HUFs cannot open PPF accounts.
15 years maturity
PPF savings scheme has a maturity of 15 years, but investors can withdraw money after 5 years of account opening subject to certain conditions. If your PPF account has become inactive, it can be reactivated.
How will the account be activated?
As per the PPF account rules, an inactive account can be revived by depositing only Rs 500 in a financial year. Failure to do so will result in the account becoming inactive. Hence, Rs 500 should be deposited in the PPF account by 31st March of every financial year to keep the PPF in active mode.
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