How to open a PPF Account? Know its rules and benefits
January 24, 2019
The government operated Public Provident Fund or PPF scheme, offers a dynamic combination of high returns, safety, and tax-saving benefits. If you are looking to save and invest for your retirement, PPF is currently one of the best options in India.
The interest earned on PPF investment is linked to 10-year government bonds and change on a regular basis. The current PPF interest rate in India is 8%. The interest is annually compounded to help investors earn high returns. PPF also enjoys EEE (Exempt-Exempt-Exempt) tax status and all the gains you earn until the completion of maturity is tax-free.
Now that you have a basic idea of PPF account benefits; let us have a look at some critical PPF rules and how to open PPF account-
Important PPF Rules
- Eligibility- While provident fund schemes like EPF and VPF are only available for salaried employees, a PPF account can be opened by any Indian citizen. You can have the account in your name or in the name of a minor.
- Maturity- As per PPF rules, you need to remain invested in the scheme for at least 15 years. After completion of this period, the scheme can also be extended further in blocks of 5 years.
- Account Transfer- PPF scheme allows account transfer too. It means that you can switch between bank branches, banks, and even post office to bank or vice versa.
- Investment Amount- In a financial year, you can invest a minimum of Rs. 500 and a maximum of Rs. 1.5 lakhs. The amount can be a lump sum investment or can be broken down into a maximum of 12 instalments.
- Taxation- As per the PPF deposit rules, investments of up to Rs. 1.5 lakhs in PPF in a financial year are eligible for tax deductions under Section 80C of the IT Act.
- Partial Withdrawal- From the 7th financial year of PPF account opening, you can withdraw a partial amount from the scheme.
- Loan- You can also take loans between the 3rd and 6th financial year of investment. After completion of 3 years, you can withdraw up to 25% of the invested amount. After repaying this loan, you can take another credit before the end of the 6th year.
How to open a PPF Account?
You can visit any branch of a reputed bank or post office to open a PPF account. Most of the banks now allow you to open PPF account online if you already have an account in the bank. Once the PPF account is opened, you can then invest money in the PPF account through cheque, cash or online transfers.
Plan your retirement with PPF
PPF benefits are one of the best compared to many other investment options. From impressive returns, tax savings, government-backed security, to the loan facility, several things make PPF a must for every individual serious about their retirement planning.
Now that you can open a PPF account online; visit the official website of your bank to know the details and take the first step towards a financially independent retirement.
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