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Public Provident Fund

Public provident fund is government backed retirement scheme with an objective to provide a financially independent life to the senior citizen of the country, post their retirement. This is savings cum tax saving instrument.

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Public Provident Fund

For its combination of tax savings, returns, and safety, the Public Provident Fund (PPF) plan is a particularly popular long-term savings plan in India. In 1968, the Finance Ministry's National Savings Institute established the PPF plan.The principal goal of the plan is to assist consumers in making little deposits and provide returns on those savings. The PPF pays a competitive rate of interest and does not demand taxation on the interest earnings.

Features Of Public Provident Fund

The main features of the Public Provident Fund account are given below:

  • A basic investment of Rs.500 is required for a PPF, with a maximum investment of Rs.1.5 lakh per financial year.
  • A PPF must be held for at least 15 years. This can be done in five-year periods.
  • You must deposit money into your PPF account once a year for a period of 15 years.
  • A PPF account can be opened for as little as Rs.100, and annual investments of more than Rs.1.5 lakh will not receive any interest.
  • You can choose a candidate for your PPF account at any time after you open it.
  • You can deposit money into your PPF account with a check, cash, promissory note, or an online transferring funds.
  • Because it is sponsored by the Indian government, the PPF is risk-free and provides fixed returns.
  • A PPF account can only be created in the name of one person.

Benefits Of Public Provident Fund

Some of the main benefits of PPF are-

Safest Plan: Because the PPF was established by the government, there is no risk of your money being stolen. It is guaranteed that you will receive your guaranteed amount upon maturity. Investing in a PPF is thus the safest option.

Excellent Profits: You can get 7.1 % each year by investing in a PPF. Your real return of 7.1%, however, is higher due to the tax refund facility.

There is no tax on the maturity amount: You are also excluded from paying taxes on the amount you get when your PPF scheme matures.

Upkeep on the Internet: You can also manage your PPF account online. The use of online banking has gotten more simple as digital banking has grown in popularity. You can keep track of your PPF account online by making contributions, computing your income with the PPF calculator, and staying informed about recent updates.

Free from the influence of the stock market: Your money in a PPF is not influenced by market performance because it is not subject to equity. In the case of mutual funds or SIPs, the inverse is true.

Eligibility Requirements To Open PPF Account

You can invest in the PPF account if you meet the following criteria:

  • PPF accounts can be opened by Indian residents over the age of 18 for themselves, family members, or on behalf of minors.
  • Individuals are not permitted to open joint or HUF (Hindu Undivided Family) accounts.
  • There is no specific limit for opening the account.
  • An opportunity to open an account online, regardless of which bank provides the service.

PPF Interest Rate

The current PPF interest rate has been lowered from 7.9% to 7.1%, and it is compounded annually. The interest is paid on March 31 each year, and the PPF interest rate is established annually by the Ministry Of finance. The minimum balance remaining between the closing of the fifth day and the last day of the month is used to calculate interest.

How Can I Make The Most Of My PPF Gains?

The bank analyses a definite amount from the 1st to the 5th of each month for income purposes. As a result, if you want to earn the most interest, you should pay before the 5th of the month.

How Can I Create An Online PPF account?

It is now possible to open a PPF account online. When applying for a PPF account online through a bank, there are a few things to keep in mind:

  • You should have a bank account where you can save money.
  • You should have joined the bank's net banking or mobile banking services.
  • Your bank account should be connected to your Aadhaar card.
  • Your Aadhaar number should indeed be connected to the mobile phone number you gave the bank.

How Can You Find Out If Your PPF Has Been Withdrawn?

Once started, a PPF account cannot be terminated even before maturity date or the 15-year term expires. In other words, after a 15-year waiting time, you can withdraw your funds. However, starting in the seventh year, the system enables partial withdrawals. From the third year onwards, you can apply for a loan.

You can monitor the status of your PPF withdrawal online by logging into your bank account and looking at your PPF digital passbook. If you need to verify the PPF account details while your bank is at a post office, however, you won't be able to do so. To check your PPF withdrawal status, you must go to the post office.

Documents Required For Opening PPF Account

To open a PPF account online or offline, you will need verification of your identity, signature, and address. Any documents utilised should not be out of date and should be valid for the duration specified in the time references.

Other than that, you will also require:

  • Passport size photographs
  • If there are nominees, you will also require the nomination form.
  • Age proof will also be required, if you are minors.

Exclusions

The PPF Account does not include the following:

  • No joint accounts are permitted.
  • Only Rs 1,50,000 lakhs can be invested in a single financial year.
  • PPF accounts are not available to non-resident Indians. Those NRIs who established a PPF account before obtaining NRI status can continue investing in the account until it matures. They can, however, increase the term of the account when it reaches maturity, which is 15 years.
  • HUFs could no longer open a PPF account, either online or offline.
  • Since 2015, the limitation has been in effect. Those who started the accounts before this time can keep it open till it matures. After the HUF account matures, it will not be renewed.
  • The account cannot be opened by citizens of their nations or foreigners visiting India.

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