Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a long-term investment scheme provided by the government of India. It was introduced in 1968 to promote savings and investments among the citizens of India. The PPF account provides a fixed interest rate that is determined by the government and is currently at 7.1% per annum.

Here are some important details about the Public Provident Fund:

• Eligibility: Any individual who is a resident of India can open a PPF account. The account can also be opened on behalf of a minor child, but the maximum limit of investment remains the same.
• Investment Limit: The minimum amount that can be invested in a PPF account is Rs. 500 per year, and the maximum amount is Rs. 1.5 lakh per year. A PPF account can be opened with an initial deposit of Rs. 100.
• Tenure: The PPF account has a lock-in period of 15 years. However, one can extend the account for another five years after its maturity.
• Interest Rate: The interest rate for PPF is decided by the government every quarter. Currently, it is at 7.1% per annum, which is compounded annually.
• Tax Benefit: Investment made in PPF accounts qualifies for tax exemption under Section 80C of the Income Tax Act. The interest earned and maturity proceeds are also tax-free.
• Withdrawal: One can make partial withdrawals from a PPF account after the completion of fifth financial years. The account holder can avail of loans against the PPF account from the third to the sixth financial year.
• Loan facility: One can take a loan up to 25% of the balance in their PPF account as on March 31 of the preceding year.
• Nomination: Nomination facility is available for PPF accounts, and an account holder can nominate one or more persons for the account.

The PPF account is one of the safest investment options available in India, and the investment made in it provide an excellent opportunity for long-term savings.