The Public Provident Fund (PPF), is a favorite among many investors, as it is backed by the Government of India and offers attractive interest. PPF enjoys the EEE benefit. The money invested in PPF will be tax exempt up to Rs 1.5 Lakhs under Section 80C of the Income Tax Act. The money accumulated and withdrawn at maturity, are also tax-free.
Investment in PPF is in fixed income and is not exposed to equities. You can expect steady, risk-free returns from PPF. Currently, PPF offers 7.6% rate of interest for the Quarter (January to March, 2018). This interest is up for review every 3 months. PPF is suitable for investors who do not want to take much risk in investments.
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These are some of the things you need to know about PPF
1. Opening of PPF account
The PPF account can be opened in designated post offices or bank branches. You can even open PPF online. PPF account can be transferred from post office to bank account and vice versa.
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2. Investment Limit
If the PPF account holder deposits more than Rs 1.5 lakh a year, the excess amount will be treated as an irregular investment and it will not attract any interest.
On the completion of the 15th year, the account holder will be eligible for complete withdrawal. If he wishes to stay invested, he can do so for a period of 5 more years.
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4. Loan from PPF account
The principal amount borrowed, has to be repaid within 36 months. The interest rate on loan against PPF, will be 2% more than the interest offered on the PPF. Be Wise, Get Rich.
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