Public Provident Fund (PPF) – A Smart Investment for Long-Term Wealth

All about Pubic Provident Fund(PPF)

Introduced by the Government of India under the Public Provident Fund Act of 1968, the Public Provident Fund (PPF) is a secure, long-term investment option designed to help individuals build a retirement corpus. It offers attractive financial benefits, including tax advantages and steady returns, making it a reliable choice for wealth accumulation.

Understand PPF in 5 Easy Steps

1. Interest Rates

The PPF interest rate is set by the government but is linked to the 10-year Government Security (G-Sec) yield as a marker.

2. Interest Calculation

To maximize earnings in PPF, investors should deposit funds before the 5th of each month as interest is calculated monthly on the lowest balance between the 5th and the end of the month and compounded annually.

3. Liquidity

PPF investments have a 15-year lock-in period. However, partial withdrawals are allowed after completion of 5 financial years, up to 50% of the balance at the end of the fourth year from the account opening date.

4. Investment Limits

• Minimum annual investment: ₹500
• Maximum annual investment: ₹1.5 lakh
• Deposits beyond ₹1.5 lakh do not earn interest.

5. Tax Benefits

PPF enjoys the EEE (Exempt-Exempt-Exempt) status:

• Exemption of the initial investment under Section 80C of the Income Tax Act.
• Exemption on returns of Investments made.
• Exemption on thew withdrawal of the 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.