Public Provident Fund or PPF is a scheme and a long term investment product launched by the Indian Postal Department in the year 1986. PPF serves all the people that include the employed, the unemployed, salaried, and the unsalaried ones. The basic motto of PPF is to avail an income post retirement. The returns of this schemes are assured and is tax free. Moreover ,since it is backed by the GOI, therefore, it is widely preferred by everyone. Following are some of the features that one should keep in mind while going for a PPF account:
1. A PPF account can be opened up in any of the post office in your city or any branch of the SBI (State Bank Of India) and some branches of nationalized banks. It can be availed by any Indian irrespective of any bar except the age obviously. In that case, an adult can act as a guardian for the minor. The notable and the most important fact is that one person can open only one account. And in case if you happen to get a second account, then it won’t fetch you any interest. In addition, NRIs are not eligible to avail the facility of PPF accounts.
2. The maximum and minimum amount that you can invest is Rs. 70,000 and Rs. 500 respectively that you can invest either as a lump or through installments. However, in order to reap the tax benefits, it is essential to invest up to 1 lac otherwise the excess deposit won’t fetch any interest.
3. The maturity tenure of a PPF account is 15 years after the date of its opening. The current rate of interest offered is 8% per annum. A person can withdraw his money in the 16th year or can continue for a further period of 5 years.
4. The loan facility is available up to 25 % of your balance amount. However, loans can only be availed from the 3rd financial year excluding the year of deposition. The interest rate is charged at 2% if the amount is returned within 36 months and at 6% on the remaining loan after 36 months.
5. The provision of partial withdraw is permissible only after 7th year onwards and the amount of withdrawal is also the 50% of the balance present at the time of deposition on the 4th year.
6. If you wish to renew your discontinued account, you will have to pay a penalty of Rs 50 per financial year and also a minimum amount of rs 500.
7. PPF is suitable for the retired and self-employed whereas EPF is suitable for salaried individuals.B
A PPF account is one of the most secured ways of investing. For all the young as well as mid aged people, investing in PPF can prove to be an ideal niche after retirement. Although, it requires a long term investment but yet it scores quite profitably in the long run.