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Who can invest in PPF?
Public Provident Fund is a scheme in which any Indian citizen can invest. This account can be opened in any bank or post office as per your convenience. The amount deposited in the PPF account matures in 15 years. After investing in it, the investor has to continue investing for 15 years. A minimum of Rs 500 and a maximum of Rs 1.5 lakh can be deposited per share in PPF. Being an EEE category scheme, up to Rs 1.5 lakh can be deposited in it in a financial year. Tax benefits are available on the interest received on it and on maturity.
There will be bumper income from interest
Investors prefer PPF for long term investment. In this scheme, if you deposit Rs 5,000 every month, it becomes Rs 60,000 in a year. If you deposit this amount continuously for 15 years, a total of Rs 9 lakh will be deposited in the PPF account. Investment in PPF earns 7.1 percent interest annually. Due to this, in 15 years, Rs 7,27,284 will be earned from interest alone. This means that the total present value for investors on maturity will be Rs 16,27,284.
What is PPF meaning Public Provident Fund?
Before understanding the rules related to pre-closure of PPF, know that this is a government scheme, in which there is a government guarantee on investment. So the investor can invest money in tension free Public Provident Fund i.e. PPF.
What is the rule of premature closure?
If the investor wants to close the PPF account before maturity, then this approval can be given after five years. The investor must have a solid reason for pre-closure. Any investor can take a PPF loan in the government scheme even before the completion of five years. Therefore, this account cannot be closed.
The investor or his spouse or dependent children are suffering from a life-threatening disease. He needs money for treatment. In such a situation, the account can be closed before 15 years.
- Money is needed for your own higher education or child's higher education.
- Change in resident status of the account holder i.e. becoming an NRI.
- The account can also be closed before maturity in case of death of the account holder. In such a case the 5 year rule does not apply.
Will premature withdrawals be deducted?
If the investor withdraws the amount deposited in the PPF account during the pre-maturity period, then a fee is charged from him. Under this, the amount is returned after deducting 1 percent interest on the total deposit. Let us tell you that tax exemption is also available on the investment fund in the scheme. Under this, investors are given a tax exemption of up to Rs 1.5 lakh in a financial year.