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PPF... One of the best long term investment

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The Public Provident Fund is a saving as well as tax saving instrument in India. It was introduced by National Savings institute of the Ministry of Finance in the year 1968. This scheme is fully guaranteed by the central government.

A person in a year can deposit to the maximum of Rs 1.5 lakhs and the minimum deposit in a year is Rs 500 but if any contribution of minimum amount in any year is not invested then the account will be deactivated and to activate the same the investor has to bear penalty for each inactive year. Any amount deposited in excess of Rs 1.5 lakhs in a year won't earn any interest. The deposit in the amount can be made in lump sum but subject to a maximum of 12 installments in a year.

The interest rate is compounded annually and paid on 31st march every year. The interest rate is fixed by the government and the current interest rate ( July 2019 - December 2019) is 8%.

The duration of the scheme is 15 years but it can be extended for more in blocks of 5years each, and on maturity the entire balance can be withdrawn.

PPF account can be opened in a post office, nationalized banks and major private banks like ICICI and Axis. Any individual who is a resident of India can open a PPF account.

One of the most important thing to remember is the deposit that we want to make in the PPF account should be made within or on 5th of the respective month..because if the deposit is made after 5th of the month then the depositer will not get any interest for that deposit in that month.

For example if you deposit the money on or before 5th of July then you will be earing interest on that amount for the month of july but if the deposit is made on 6th of July then you will not get the interest of july but we will get the interest next month there by losing one month interest... So as an investor deposit the money on or before 5th the month.

PPF falls under EEE regime of taxation i.e Exempt Exempt Exempt. Contribution to PPF account is eligible for deduction interest earned is also exempted and maturity amount is also exempted. But the interest earned on PPF account has to mentioned on the income tax return.

You can calculate you PPF and the amount to be received from the calculator given below :
     
                                                              Calculator of PPF









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