Public Provident Fund (PPF) account is a small saving account that is also a tax saving instrument which will allow the citizens of India to save tax up to Rs. 150000 under section 80C. Public Provident Fund (PPF) account is introduced by National Savings Institute of the Ministry of Finance in 1968 with an aim to promote saving habits of the people and offer returns that can beat inflation (as per the historic interest rates, PPF interest rate are always on and above the inflation rate) and provide income tax benefits. There are various Benefits of Public Provident Fund Account and this scheme is a huge hit among the middle class families of the country. It is to note that there are days where PPF have given interest rates in the range of 12% per annual.
Advantages & Benefits of Public Provident Fund Account
Start Small & Save Big
You will be to start the PPF account with as low as Rs. 100 and the minimum contribution towards the PPF account should be Rs. 500 in a year and a maximum of Rs. 150000 (with effect from August 2014) is allowed in a financial year. Please note that you need to make all your contributions by not exceeding the maximum of 12 transactions that are allowed in a financial year for PPF account.
Invest Tip: If you can afford deposit the entire amount you wish to invest before 5th April in the financial year to get the maximum benefit from interest, or else if you are planning to deposit money in installments deposit it before 5th of every month to get the interest for that month else it will considered for interest calculation only in the next month.
Easy to Access & Operate
After allowing the banks for maintaining the PPF accounts, the service and accessibility for PPF accounts have increased greatly and now you can contribute online using the net banking services and you can even automate your contributions by setting up a recurring debit from your savings account linked with your PPF. You can also access your PPF account, get statements for tax purposes online using the net banking service provided by the bank.
Good for Retirement & Personal Goals
Considering the PPF account contributions as a part of your debt portfolio it can offer good, sustainable and stable returns to fund your goals or retirement. Considering that you are contributing Rs. 150000 every year for 15 years and assuming that the current interest of 8.7% (at the time of writing this article) to be stable for the entire period you will be accumulating a corpus of 43 Lakh rupees which is safe and tax free and it is one of the major benefits of public provident fund account.
PPF Deposit Illustration
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Use PPF for Meeting Fund Requirements
PPF trust allows its subscribers to avail loan starting from the 3rd financial year after you open your PPF account and you can use your PPF account for meeting any of your fund requirements and the loan when compared with personal loan would be much cheaper.
Apart from that you will be able to withdraw money from PPF account starting from 7th financial year from the year of opening your account.
Extend above 15 Years
The default duration of the PPF scheme is for 15 years and you can extend the duration for the block of 5 years and so on and you can maintain this account for as long as you wish. This approach is especially good for the young adults who wish to PPF for retirement purposes or even for those who don’t need money immediately. For extending the PPF duration you need to give intimation well in advance to the bank/post office where your PPF account is maintained.
Complete Tax Exemption
PPF account offers Exempt, Exempt, Exempt (EEE) tax status where all your contributions to the PPF account will be exempt from income tax under section 80C, proceedings upon maturity which includes your contribution and the interest earned will also be exempt from income tax making it one of the safest (read debt) tax saving instruments for investors.
Free from Attachment
PPF account risk free investment and is free from attachment under court decree order, which means that even in case if you are debt ridden (I hope & pray that such an issue will never occur in your life) and liable to pay off the debts your PPF investment cannot be attached as per law and your contributions including interest will be protected for your family and is a great benefit of public provident fund account as you can feel safe about your family even during your distress.
Between Us: Considering that every scheme has its own set of advantages & disadvantages share your opinion about Public Provident Fund account and how you feel that it suits your requirements, personally I am an investor for PPF and contributing for it considering that as my debt portfolio. How about you guys, are you already a subscriber for PPF or planning to open an account with PPF? If so please share your reasons why you have opened and how you feel that it is beneficial for your future.