Public provident funds or PPF is a type of long term investment option which is quite popular in India. Such an investment option is usually preferred by and useful for self-employed individuals and those who work in small companies. Such companies do not provide options for GPF and EPF, which is why employees need to invest in the public provident fund. Take a look at how public provident funds function in India.
Rate of return of PPF
Interest rates for the investment is decided by the Indian government and is declared at the time of the Central budget. For instance, for 2017-18, the rate was 7.9 percent per annum. Furthermore, the calculation of the interest occurs on a monthly basis, but the fund is settled at the end of the financial year. The interest that you receive from the PPF is tax-free, which will increase your savings.
How to open and maintain PPF account
A PPF account can be opened quite easily. Almost all banks offer the service and people with savings accounts in the Post Office can also opt for such an account. If you want, you can conduct the entire business over the internet through your debit card or through internet banking services. A PPF allows for long term savings that matures in 15 years.
Features of PPF
A PPF is backed by the Indian government and there is almost no risk of losing your money if you decide to invest in such a plan. Apart from the interest being tax-free, the original invested sum is also exempt from the tax under section 80C. A public provident fund also offers a wide range when it comes to the amount of initial investment. You can invest as low as Rs. 100 at the first time.
Annually, you will have to deposit at least Rs. 500. However, the PPF does not allow deposits of more than Rs. 1,50,000 every year. Moreover, the PPF is transferrable, which means that you can transfer it to someone else’s name if you feel like it. This is especially useful if you have children and want to leave the money to them.
A PPF is valid for 15 years and matures at the end of that period. However, you can choose to extend the duration of the PPF by 5 years at the most. This extension can be done without making any contribution over the next 5 years or you can carry on making periodic contributions as well. Thus, a PPF is a great and flexible way of ensuring a steady savings by making a small investment.
Rate of return of PPF
Interest rates for the investment is decided by the Indian government and is declared at the time of the Central budget. For instance, for 2017-18, the rate was 7.9 percent per annum. Furthermore, the calculation of the interest occurs on a monthly basis, but the fund is settled at the end of the financial year. The interest that you receive from the PPF is tax-free, which will increase your savings.
How to open and maintain PPF account
A PPF account can be opened quite easily. Almost all banks offer the service and people with savings accounts in the Post Office can also opt for such an account. If you want, you can conduct the entire business over the internet through your debit card or through internet banking services. A PPF allows for long term savings that matures in 15 years.
Features of PPF
A PPF is backed by the Indian government and there is almost no risk of losing your money if you decide to invest in such a plan. Apart from the interest being tax-free, the original invested sum is also exempt from the tax under section 80C. A public provident fund also offers a wide range when it comes to the amount of initial investment. You can invest as low as Rs. 100 at the first time.
Annually, you will have to deposit at least Rs. 500. However, the PPF does not allow deposits of more than Rs. 1,50,000 every year. Moreover, the PPF is transferrable, which means that you can transfer it to someone else’s name if you feel like it. This is especially useful if you have children and want to leave the money to them.
A PPF is valid for 15 years and matures at the end of that period. However, you can choose to extend the duration of the PPF by 5 years at the most. This extension can be done without making any contribution over the next 5 years or you can carry on making periodic contributions as well. Thus, a PPF is a great and flexible way of ensuring a steady savings by making a small investment.
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