In the country where the interest rates on FDs and bank deposits are decreasing, in the meantime, various schemes of the post office have come as a relief for a common man.
In the country where the interest rates on FDs and bank deposits are decreasing, in the meantime , various schemes of the post office have come as a relief for a common man. These post office schemes are not only safe and risk-free, but they also give returns up to double that of bank deposits. This is the reason why common people believe the most in post office schemes despite investment options like mutual funds and shares.
Actually we are talking about Post Office Public Provident Fund Scheme ie PPF. The government has now declared an interest rate of 7.10 percent on PPF under the rates announced on small deposits. The government changes it from time to time. But despite these changes, the interest rates in this scheme do not come down much. A person can open only one account under this scheme.
How much to invest
Where you can make a minimum of 500 rupees in a financial year under PPF. You can deposit any maximum amount in it. But you will get exemption under Section 80C of Income Tax up to a maximum of Rs 1.5 lakh. The interest income on maturity will also be completely tax free. It has a maturity period of 15 years and can be extended thereafter in blocks of 5 years.
Interest rates are updated every three months
The Finance Ministry revises the interest rate every three months. The interest rate for the June quarter is 7.1 per cent. The Finance Ministry will take a decision on the interest rate on June 30. The interest income is transferred to your account at the end of every financial year. According to the current rate, if you invest Rs 100 daily, then after 15 years when it matures, you will get a lump sum of Rs 989931 which will be completely tax free. Your total deposit amount during 15 years will be Rs 547500.
Get loan
You also get the benefit of loan against PPF. From the financial year from which you start investing, you get loan facility from the next financial year. This facility is available for a period of five years. You can get a loan up to 25 percent of the amount deposited in your account. Loan can be availed only once in a financial year. The second loan will not be available until the first loan is repaid. If the loan is repaid within three years, the interest rate will be only 1% per annum.
Premature withdrawal rules
In terms of withdrawals, withdrawals can be made once in a financial year after a lock-in period of five years. This can be up to 50% of the amount deposited in your account. Talking about premature closure, it is allowed if the account holder becomes ill or for higher education of himself or children. For this some charges are deducted.
