Public Provident Fund (PPF)

What is Public Provident Fund (PPF)?

Public Provident Fund (PPF) is a Savings cum tax-Savings Scheme introduced by the National Savings organization of India in 1968.

Once a person enrolls for PPF, he has to invest some amount in the scheme every year for 15 years. The invested amount earns interest and helps in building wealth.

Public Provident Fund (PPF) is therefore a very useful product for the common man to build wealth over a long term.

What are the features of Public Provident Fund (PPF)?

Duration

  • Public Provident Fund (PPF) is a long terms scheme for building wealth. Maturity period is 15 years.
  • It may be extended by another 5 years at the end of 15 years. After that, it can be extended for another 5 years and so on.

Investment

  • A minimum yearly deposit of Rs. 500 is required to open and maintain a PPF account.
  • A minimum of Rs 500 and a maximum of Rs 150,000 (Rs 1.5 lakhs) can be made in a financial year.
  • In a year, deposits can be made in one lump-sum or in multiple installments for a maximum of 12.

Interest

Interest is calculated annually. Current interest rate is 8.7%.

Tax

  • Investment in Public Provident Fund (PPF) qualifies for tax deduction under Section 80C
  • Interest in PPF is tax free

Where to open Public Provident Fund (PPF) Account

  • Any nationalized Bank like State Bank of India, Punjab National Bank etc.
  • Selected authorized private bank
  • Post Office

Conclusion

Public Provident Fund (PPF) is a long term investment option. It helps the investor to build wealth and to meet his long term objectives, like his retirement, children’s marriage or education.

Public Provident Fund (PPF) is also beneficial for its tax benefits. Investment is tax-deductible under 80C, and interest is tax free.

Overall, Public Provident Fund (PPF) is a very good investment option for Indians.

References

http://www.indiapost.gov.in/ppf.aspx

https://en.wikipedia.org/wiki/Public_Provident_Fund_(India)

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Subhodeep Mukhopadhyay

I am a Management Consultant in the Education Sector. In my previous corporate career, I have worked in Banking, Private Equity and Software industry. I am an MBA in Finance/ Computer Engineer and enjoy doing equity research and financial analysis in my free time.

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