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2 mins Read | 9 Months Ago

Why is PPF investment not just income tax saving option. Know Why?

Public Provident Fund (PPF) scheme is a long-term investment option that offers assured and attractive rate of interest and returns on the amount invested. The interest earned and the returns are not taxable under Income Tax. Under section 80C of the Income Tax Act, one can get a tax deduction of up to Rs 1.5 lakh, by investing the same amount in a PPF. A PPF Account also has many other advantages. Read further to know why PPF is a good long-term investment plan.

What is PPF account?

Want to earn inflation beating assured, attractive & compounded returns, without taking any risks? Then a Public Provident Fund or PPF is the go to investment solution for you.  PPF is a Government of India–backed investment plan that offers stable & inflation beating returns. It is considered as the best tool for retirement savings. Many risk-averse investors invest in PFF for tax savings purposes. It offers tax benefits, on both returns and investments, thus making it a compelling choice among several investors. Let’s understand the Tax exemptions related to PPF.

PPF is one of the few investment plans in India that provides the advantage of an Exempt-Exempt-Exempt (EEE) Tax status. The amount deposited in the Account, in each financial year, is exempted from taxes. Similarly, the interest earned is tax-free. Also, the maturity amount including the principal sum and the interest, is free from taxation. Apart from tax savings, here’s why PPF is a good investment plan:

 

Assured & attractive returns: The PPF is backed by the government, which makes it completely risk-free. This also means that you get to earn assured returns at the rate of 7.1%, which is fully exempted from Income Tax, under Section 80C

  1. Minimum deposit amount: A PPF Account offers flexibility in terms of the investment amount. Any individual can invest in a PPF Account with a minimum amount of Rs 500 and a maximum deposit amount of Rs 1,50,000, in a financial year. At ICICI Bank, deposits can be done easily through our Digital Banking channels, like the iMobile Pay app and ICICI Bank Retail Internet Banking
  2. Good option for conservative investors: The PPF Account is a good option for conservative investors. Since it is a zero risk product, a PPF investment is the best post-retirement fund to serve the financial requirements, during old age
  3. Gain from the power of compounding: The current interest rate on PPF is % compounded annually. For instance, if you invest Rs 1.5 lakh every year for a duration of 25 years, you will accumulate approximately Rs 1.03 crore*. This means that on a total investment of Rs 37.5 lakh, you are gaining a wealth of Rs 65.5 lakh 
  4. Option to extend the lock-in period: A PPF investment plan comes with a lock-in period of 15 years. In case you want to continue investing, you can extend the plan by a block of 5 years after the maturity date.

If you are looking for an investment plan that offers such benefits, you can open a PPF Account with ICICI Bank. If you’re an existing customer, you can now open an online PPF Account instantly, using ICICI Bank Internet Banking facility.

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