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Top 5 Benefits of Having a PPF Account

Updated On Aug 28, 2021

When it comes to the most popular savings-cum-investment products in India, PPF or Public Provident Fund ranks top in the list. An excellent choice for low-risk investors, PPF is one of the best solutions for investors seeking long-term capital appreciation. In addition to the same, what makes PPF a superior choice are tax benefits on both investment and returns. Let us uncover the benefits of PPF in detail.

5 Major Benefits of PPF Account 

The top 5 benefits of a PPF account are:

  • Risk-free, Guaranteed Returns

    The Public Provident Fund is supported by the Government of India. Therefore, one of the major PPF account benefits is that it is entirely free from risk. Talking about the returns, they too are guaranteed by the government. Most importantly, note that funds in a PPF account cannot be attached by even a court order to pay off debtors.
  • Multiple PPF Tax Benefits

    One of the key things about PPF account is its exempt-exempt-exempt (EEE) tax status. PPF account is one of the only investments in India that provides multiple tax benefits. It is one of the most tax efficient investments as the amount invested up to Rs. 1,50,000 is deductible from taxable income. Moreover, the interest earned is non-taxable. Lastly, the maturity amount received after 15 years is also tax exempt. 
  • Small Savings, Great Returns

    PPF allows investors with flexibility in the investment amount. An individual can open their PPF account with as low as Rs. 100. Every year, they can invest a minimum of Rs. 500, with the maximum being Rs. 1,50,000. An investor can also make investments as a lump sum or in a maximum of 12 instalments. Talking about returns, the PPF interest rate for FY 2021-22 is 7.10%.

Also read: Top Benefits of PPF    

  • Liquidity With Partial Withdrawal & Loan Facilities

    PPF has a lock-in period of 15-years. During this period, a person can take a loan between the 3rd year and the 6th year. What’s best is that from the 7th year, the investor can make partial withdrawals from their PPF account. Note that other than partial withdrawals, they can also prematurely close their PPF account if they require funds for higher education or severe medical treatment.
  • Flexible Tenure

    An investor can enjoy flexibility of the PPF tenure as per their will. After the maturity of the PPF account after 15 years, an investor can either withdraw the entire amount or increase their PPF tenure in blocks of 5 years. It is important to note that if the bank or the post office is not informed, the account gets automatically extended. 

So, what are you waiting for? Go ahead and get yourself a PPF account opened today! Remember, it is one of the best investment avenues in the fixed income space. Moreover, it offers tax benefits in adherence to Section 80C of the Income Tax Act.

Also read: Know Everything About Public Provident Fund (PPF)

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.    

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