Public Provident Fund (PPF): A Secure Tax-Saving Investment for Long-Term Growth
01 Feb 2024
PPF: Ideal Tax-Saving Option for Low-Risk Investors
The Public Provident Fund (PPF) is a long-term savings and investment scheme introduced by the Government of India to encourage individuals to build a retirement corpus while enjoying various financial benefits established in 1968 under the Public Provident Fund Act.
Understand PPF in 5 easy steps
1. Interest rates
While the PPF rate is prescribed by the government, it is linked to the 10-Year GSEC as a marker.
2. Interest calculation
Interest on PPF is compounded annually but calculated monthly.
3. Liquidity
PPF investments are locked in for a period of 15 years. Partial withdrawal post completion of seven years is available to the extent of 50 % at the end of the fourth year from the date of account opening.
4. Investment limit
Minimum investment = Rs 500 maximum and the maximum investment = Rs 1.5 lakhs. Investments over Rs 1.5 lakhs do not fetch a return.
5. Tax benefit
PPF is among the rare investments that get a tax benefit at all three stages (EEEs) –Exemption on initial investment under section 80C of the Income Tax Act, Exemptions on the returns on investment made and Exemption on withdrawal of investment proceeds.
Benefits of PPF
- Attractive tax saving option
- Suitable for building retirement corpus
- Avail of loan upto a maximum of 25% of the PPF balance.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision.
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