What is PPF- Public Provident Fund. Know the full details here.
Since its introduction in 1968, the Public Provident Fund (PPF), a long-term savings programme backed by the government, has gained popularity in India. PPF is intended to encourage people to save money for their retirement by providing all-inclusive investment security and enticing tax-free profits. It can be opened at any post office or specified banks and is available to all Indian residents, including children. The maximum annual investment in a PPF account is Rs. 1,50,000, with a minimum deposit of Rs. 500. PPF currently has an interest rate of 7.1% p.a., compounded yearly.
PPF accounts can be extended in 5-year increments and have a 15-year term. After the seventh year, partial withdrawals are permitted, and loans can be secured against the PPF account from the 3rd year to the 6th year. PPF is an excellent investment option for individuals looking for a long-term savings plan with tax benefits and guaranteed returns. However, it is important to remember that PPF is a long-term investment, and premature withdrawals should be avoided as they attract a penalty.
Below is the calculation which approximately show how much investment one has to make to earn 1 crore.
The best part about public provident fund is that the contribution made will be eligible for tax deduction under section 80C of income tax act. And the interest earned will also be exempt under income tax act.
If you are planning to invest in public provident fund remember one thing, invest within 5th of any month. If u invest after 5th of a month you will not be eligible for interest for the remaining days of the month. Interest will be calculated from next month. For example, if you invest on 6th April you will not be eligible for interest payment for that entire month. The interest will be calculated from 1st of May.
Keeping all these points in mind I hope many will start investing soon. Happy investing!