It is not necessary that all employers provide their employees with a Provident Fund; a percentage of money deducted from an employee’s salary and matched by the employer, which serves as a saving. Small business owners and self-employed businessmen must make provisions to save money for retirement and a good way to put away some money for the future is to open a Public Provident Fund Account, which serves as a great investment vehicle for your retirement savings.
What are the features of PPF investment account?
There are a few basic features of the PPF account that you must be aware of.
Tenure: PPF investment account is a 15 year product which comes with a lock in period of 16 years. You cannot count the first year of investment in the maturity period. So if you made your first PPF investment in 2018, your account will mature in 2034.
Deposit limits: You must invest a minimum of ₹500/- per annum, where the maximum investment limit per annum is ₹150,000/- in a financial year. The deposit can be made monthly or in a single shot anytime during the financial year. Furthermore, you can open your PPF investment account with an initial deposit of only ₹100/-
Rate of interest: Earlier, the government used to offer a fixed rate of interest for the entire tenure of the account, however as per new RBI guidelines, the government declares a new rate of interest every quarter.
Account holders: At any given time, an individual is permitted to hold only one PPF account. A salaried or self-employed individual can open this account but no Hindu Undivided family or association is permitted to open it. Furthermore, an individual can open a joint account with a minor provided he/she is a parent/guardian but not a grand-parent. Besides, opening an account with a minor, PPF accounts cannot be opened as joint accounts. NRIs are also not allowed to hold these accounts.
Premature withdrawal: Most people are unimpressed by the 15 year lock-in period and so they avoid investing in the PPF scheme. However there are provisions for pre-mature withdrawal with PPF. You can make partial withdrawals from your account during financial crises. Withdrawals from the account are permitted after 7 years and you can withdraw money from the account once a year.
Loan on PPF: Between the 3rd and 6th year, you can apply for a loan against the money accumulated in your account. Loans can be availed amounting to a maximum of 25% of the balance in your account.
Discontinued accounts: Depositing a minimum amount of ₹500/- per annum in your account is mandatory. If you fail to do so, your account will be deemed as discontinued. However the interest on your account will continue to accrue. In case you miss depositing the minimum account in a given financial year, you can pay a penalty fee of ₹50/- for every year you defaulted plus subscription arrears of ₹500/- per financial year to regularize your account.
What are the features of PPF investment account?
There are a few basic features of the PPF account that you must be aware of.
Tenure: PPF investment account is a 15 year product which comes with a lock in period of 16 years. You cannot count the first year of investment in the maturity period. So if you made your first PPF investment in 2018, your account will mature in 2034.
Deposit limits: You must invest a minimum of ₹500/- per annum, where the maximum investment limit per annum is ₹150,000/- in a financial year. The deposit can be made monthly or in a single shot anytime during the financial year. Furthermore, you can open your PPF investment account with an initial deposit of only ₹100/-
Rate of interest: Earlier, the government used to offer a fixed rate of interest for the entire tenure of the account, however as per new RBI guidelines, the government declares a new rate of interest every quarter.
Account holders: At any given time, an individual is permitted to hold only one PPF account. A salaried or self-employed individual can open this account but no Hindu Undivided family or association is permitted to open it. Furthermore, an individual can open a joint account with a minor provided he/she is a parent/guardian but not a grand-parent. Besides, opening an account with a minor, PPF accounts cannot be opened as joint accounts. NRIs are also not allowed to hold these accounts.
Premature withdrawal: Most people are unimpressed by the 15 year lock-in period and so they avoid investing in the PPF scheme. However there are provisions for pre-mature withdrawal with PPF. You can make partial withdrawals from your account during financial crises. Withdrawals from the account are permitted after 7 years and you can withdraw money from the account once a year.
Loan on PPF: Between the 3rd and 6th year, you can apply for a loan against the money accumulated in your account. Loans can be availed amounting to a maximum of 25% of the balance in your account.
Discontinued accounts: Depositing a minimum amount of ₹500/- per annum in your account is mandatory. If you fail to do so, your account will be deemed as discontinued. However the interest on your account will continue to accrue. In case you miss depositing the minimum account in a given financial year, you can pay a penalty fee of ₹50/- for every year you defaulted plus subscription arrears of ₹500/- per financial year to regularize your account.
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