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PF Master Scheme: Your money will be safe and you will get excellent interest on it. You will get both these facilities in one government scheme. Whose name is Public Provident Fund, in common language it is called PPF. It is one of the most popular small savings schemes in the country.
Actually, people in the country blindly invest money in PPF. There is no loss of even a single penny on investment in this, because this scheme is guaranteed by the Central Government. Let us know the features of PPF scheme one by one-
How much will have to be invested in PPF?
In this government scheme, you can invest a minimum of Rs 500 annually and the maximum limit is up to Rs 1.5 lakh. No interest is available on deposits exceeding ₹1.5 lakh in a financial year. The amount can be deposited in lump sum or in installments. There is no limit to this.
How much interest is available on PPF?
Public Provident Fund gives higher interest than fixed deposits in banks and post offices. At present the government is giving 7.1 percent interest annually on PPF. Compound interest is earned on investments, which is calculated on an annual basis. Interest is paid every year in March. Interest rates are reviewed every three months i.e. on quarterly basis. The final decision regarding the interest rate is taken by the Finance Ministry.
Do you get the benefit of tax exemption on PPF?
This is a great scheme in terms of tax exemption. Therefore it is very popular among employed people. By depositing money in PPF, you can avail better returns as well as tax exemption. You can avail tax exemption under Section 80C of Income Tax, the maximum limit of which is Rs 1.5 lakh. Investment in PPF, interest received on it and the amount received on completion of maturity, all three are completely tax free. Investment in PPF has to be made for 15 years.
For how many years will one have to invest in PPF?
According to government rules, investment in PPF scheme has to be made for 15 years. If you want to continue even after maturity, then in such a situation you can extend the PPF account for 5 years. For PPF extension, one has to apply one year before maturity.
How to withdraw money from PPF midway?
However, the maturity period of this government scheme is 15 years. But in case of emergency, you can withdraw 50 percent of the deposited amount. The condition for this is that 6 years should be completed after opening the account, that is, the amount can be withdrawn only after 6 years.
Is there loan facility against the amount deposited in PPF?
After operating the PPF account for three years, you can also take a loan on it. Loan facility is available from the third to sixth year of account opening. However, the second loan can be applied for only after the first loan has been closed. You can take loan only for 25 percent of the amount deposited in PF account. 2 percent more interest has to be paid on loan on PPF. For example, if the current interest rate on PPF is 7.1 percent, then the account holder will have to pay 9.1 percent interest on the loan. The loan will have to be repaid in maximum 36 months.
Who and where can open a PPF account?
Investing in PPF account is quite safe. You can open PPF account in almost all government and private banks of the country including post office. For this it is necessary to be an Indian citizen. You can open a PPF account in the name of minor children, but for this it is mandatory to have a guardian. The earnings from the child's account are added to the parent's income.
Can PPF account be closed?
According to the rules, after opening a PPF account, it is not allowed to be closed for 5 years. After this, there is a provision to close it only in some cases. Such as life-threatening illnesses affecting the account holder, spouse, dependent children or parents. Medical documents are required to make a claim on these grounds. Apart from this, the account is automatically closed on the death of the account holder.
Is this a special rule regarding depositing money in PPF?
If you are depositing money in PPF, then deposit it by the 5th of the month, so that you continue to get interest for that entire month. But if you deposit in PPF account till 6th or last date of that month, then interest will be added on it from the next month. Interest is calculated on the minimum balance between the 5th and last day of every month.
How can one become a millionaire through PPF?
You can become a millionaire by depositing little by little money in this government secured scheme. The formula is very simple. By adding just Rs 405 daily i.e. Rs 1,47,850 annually, you can raise a total of Rs 1 crore in 25 years based on the current interest rate of 7.1%. You can verify the figures yourself with the help of PPF calculator.
