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MEANING:
Public provident fund is a popular investment scheme among investors courtesy its multiple investor-friendly features and associated benefits. It is a long-term investment scheme popular among individuals who want to earn high but are also looking for stable returns. Safety of the principal amount is the prime target of individuals opening a PPF account
Why open a PPF account?
A Public provident fund scheme is ideal for individuals with a low risk appetite. Since this plan is mandated by the government, it is backed up with guaranteed returns to protect the financial needs of the masses in India. Further, invested funds in the PPF account are not market-linked.Investors can also undertake the public provident fund regime to diversify their financial and investment portfolio.
Eligibility Criteria
Indian citizens residing in the country are eligible to open a PPF account in his/her name. Minors are also allowed to have a Public provident fund account in their name, provided it is operated by their parents.
Non-residential Indians are not permitted to open a new PPF account. However, any existing account in their name remains active till the completion of tenure. These accounts cannot be extended for 5 years – a benefit available to Indian residents.
Interest On a PPF Account
The interest payable on public provident fund scheme is determined by the Central Government of India. It aims to provide higher interest than regular accounts maintained by various commercial banks in the country.
Interest rates currently payable on such accounts stands at 7.1%, and is subject to quarterly updates at the discretion of the government.
How To Open a PPF Account
Both offline and online procedures are available for an individual provided he/she meets requisite parameters mentioned in the eligibility criteria. Activating PPF online can be done by visiting the portal of a chosen bank or post office.
The following documents have to be produced at the time of activation of a public provident fund account –
KYC documents verifying the identity of an individual, such as Aadhaar, Voter ID, Driver’s License, etc.
PAN card.
Residential address proof.
Form for nominee declaration.
Passport-sized photograph.
Tax Benefits
Income tax exemptions are applicable on the principal amount invested in a PPF as an account. The entire value of investment can be claimed for tax waiver under section 80C of the Income Tax Act of 1961. However, it should be kept in mind that the total principal that can be invested in one financial year cannot exceed Rs. 1.5 Lakh.
Also, this tax benefit is available for all 80 C investments cumulatively.
The total interest accrued on PPF investment is also exempt from any tax calculations.
CONCLUSION :
When choosing a task saving avenue be sure to choose according to your risk appetite
If you are conservative to moderate investor the PPF is very good to investment avenue
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