What is PPF?

PPF stands for Public Provident Fund. It is a popular long-term savings and investment scheme in India that is backed by the government. PPF was introduced by the Indian government to encourage individuals to save for their retirement and other long-term financial goals while offering them tax benefits.

Details about PPF:

Eligibility: Any resident Indian individual, including minors, can open a PPF account. Non-resident Indians (NRIs) are not eligible to open a PPF account, but if they had an account before becoming an NRI, they can continue to hold and operate it until maturity.

Duration: PPF accounts have a maturity period of 15 years, which can be extended in blocks of 5 years indefinitely after maturity.

Minimum and Maximum Contribution: The minimum annual contribution to a PPF account is Rs. 500, and the maximum annual contribution is Rs. 1.5 lakh. These contribution limits are subject to change based on government regulations.

Tax Benefits: Contributions made to a PPF account are eligible for tax deductions under Section 80C of the Income Tax Act, up to a maximum limit of Rs. 1.5 lakh per year. Additionally, the interest earned and the maturity amount are both tax-free.

Interest Rate: The interest rate on PPF accounts is set by the government and is subject to change periodically. The interest rate is typically higher than that offered by regular savings accounts and fixed deposits. It is compounded annually.

Withdrawals: Partial withdrawals from a PPF account are allowed after the completion of the 5th financial year. The amount that can be withdrawn is subject to certain conditions and limits. Full withdrawal is allowed on maturity, which is after 15 years.

PPF is a secure and attractive investment option for those looking to build long-term wealth, enjoy tax benefits, and create a financial safety net for their future. It is essential to be aware of the current rules and regulations governing PPF accounts, as they may change over time.