PPF

PPF Service By Arth Vipra Finvest Pvt Ltd

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What is a PPF?

Public Provident Fund (PPF) was introduced in India in 1968 with the objective to mobilize small savings in the form of investment, coupled with a return on it. It can also be called a savings-cum tax savings investment vehicle that enables one to build a retirement corpus while saving on annual taxes. Anyone looking for a safe investment option to save taxes and earn guaranteed returns should open a PPF account. Public Provident Fund (PPF) scheme is a long term investment option that offers an attractive rate of interest and returns on the amount invested. The interest earned and the returns are not taxable under Income Tax. One has to open a PPF account under this scheme and the amount deposited during a year will be claimed under section 80C deductions.

 

A PPF account can be opened with either a Post Office or with any nationalised bank like the State Bank of India or Punjab National Bank, etc. These days, even certain private banks like ICICI, HDFC and Axis Bank among others are authorized to provide this facility. You need to submit the duly filled application form along with the required documents i.e. the KYC documents like identity proof, address proof, and signature proof. Post submitting these documents you can deposit a prescribed amount towards the opening of the account. The current interest rate is 7.1% p.a. (for the quarter 1 July 2021 to 30 September 2021; continued from the previous quarter) that is compounded annually. The Finance Ministry sets the interest rate every year, which is paid on 31st March. The interest is calculated on the lowest balance between the close of the fifth day and the last day of every month.

What does PPF cover?

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Features and Benefits of a PPF:

Tenure: The PPF has a minimum tenure of 15 years, which can be extended in blocks of 5 years as per your wish.

Investment Limits: PPF allows a minimum investment of Rs 500 and a maximum of Rs 1.5 lakh for each financial year. Investments can be made in a lump sum or in a maximum of 12 instalments.

Opening Balance: The account can be opened with just Rs 100. Annual investments above Rs 1.5 lakh will not earn interest and will not be eligible for tax saving.

Deposit Frequency: Deposits into a PPF account has to be made at least once every year for 15 years.

Mode of deposit: The deposit into a PPF account can be made either by way of cash, cheque, Demand Draft or through an online fund transfer.

Nomination: A PPF account holder can designate a nominee for his account either at the time of opening the account or subsequently.

Joint accounts: A PPF account can be held only in the name of one individual. Opening an account in joint names is not allowed.

Risk factor: Since PPF is backed by the Indian government, it offers guaranteed, risk-free returns as well as complete capital protection. The element of risk involved in holding a PPF account is minimal.

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Why is a PPF important?

PPF is one investment vehicle that falls under the Exempt-Exempt-Exempt (EEE) category. This, in other words, means that all deposits made in the PPF are deductible under Section 80C of the Income Tax Act. Furthermore, the accumulated amount and interest is also exempt from tax at the time of withdrawal. It is important to note that a PPF account cannot be closed before maturity. A PPF account, however, can be transferred from one point of designation to another. But, do remember that a PPF account cannot be closed prematurely. Only in the case of the account holder’s demise can the nominees file for the closure of the account.

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E-3/35, Vishesh Khand , Gomti Nagar, Lucknow, Uttar Pradesh 226010
15/90, Civil lines, Kanpur-208001

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E-3/35, Vishesh Khand , Gomti Nagar, Lucknow, Uttar Pradesh 226010
15/90, Civil lines, Kanpur-208001