Public Provident Fund rules: Here are little-known certainties that you must know before investing in PPF
PPF suits risk-averse investors who are happy with moderate but ensured returns. Inspite of its popularity, many investors don't know about numerous significant actualities related with the PPF account.
Public Provident Fund is a savings scheme, offered by India Post and banks. It can be opted for regular deposits and can be started with a minimum investment amount of Rs 500/-. This plan comes with a maturity period of 15 years and also offers tax deduction under section 80C.
From 01.07.2019, the interest rate offered is 7.9 per cent per annum (compounded yearly).
PPF suits risk-averse investors who are happy with moderate but ensured returns.
Presently, PPF offers 7.9 per cent returns, compounded annually. The interest rate is surveyed every financial quarter. Also, PPF appreciates Exempt-Exempt-Exempt (EEE) charge status on its returns. This implies the premium earned, alongside continues accumulated on development and ventures, are charge absolved under Section 80C.
PPF offers liquidity as incomplete withdrawals. From the seventh year of opening the record, financial specialists can make 1 withdrawal consistently. Moreover, as PPF goes under the EEE class, withdrawals produced using the PPF account before the maturity period is also tax exempted.
Investors should finish at least 5 financial years to be qualified for premature closure. However, only under certain circumstances, premature closure is permitted. For instance, if there should be an occurrence of the passing of the holder, or if the sum is required for the advanced education of the holder or minor record holder, treatment of an infirmity or dangerous illness of the holder, life partner, parent, or youngsters, untimely withdrawal can be made. Additionally, note that premature closure is subject to penalty.
From the 3rd financial year and up to the 6th financial year, investors can avail a loan against his Provident Fund Account, to the extent of 25 per cent of the amount deposited at the end of the year immediately preceding the year in which the loan is applied. The credit can be replayed either in one singular amount or regularly scheduled payments inside a time of 3 years
At the end of 15 year or on maturity, policyholders have the choice to either close the account or extend it. You can close the record, and pull back the sum or expand the development time frame in a block of 5 years. The expansion of the record can be with or without new stores. Be that as it may, in the event that policyholders need to proceed with their PPF account with no new stores, at that point they have to educate the branch for such expansions.
By filling up Form H, investor need to inform the branch before the termination of 1 year from the maturity date to extend their PPF account with fresh deposits.