The PPF or Public Provident Fund is a sterling option for a long-term investment plan. People generally perceive that PPF is a tax saving financial instrument only.
Investing in this plan regularly every year for 15 years assures you of excellent wealth creation in addition to the exemption of up to Rs 1,50,000. under Sec. 80c of the Indian Income Tax Act.
PPF account is an initiative of the National Savings Institute of the Ministry of Finance under the aegis of the Central Government.
A PPF account can be opened at any branch of the State Bank Of India or its associate banks. Public sector banks like Bank Of India, Central Bank of India and Bank Of Baroda offer this facility also.
Not to be left behind private sector banks like ICICI Bank and Axis Bank, offer this facility too. With the advent of online transactions in banks, your PPF online account can be managed from your computer or smartphone. These accounts may be opened at General Post Offices also which are omnipresent in our country. Being backed by the central government it is an extremely safe investment option.
PPF Account Details
A PPF account can be opened with a deposit of Rs 100.00 only. You can open a PPF account for your minor child also. (The Income Tax exemption will be the sum of your investment for your self plus your minor child’s investment value).
A minimum investment of Rs 500.00 has to be done every year for consecutively 15 years. A maximum investment of Rs 1,50,000 can be done in 12 installments or once a year.
If your PPF account is in a bank, then you can advise the manager for auto debit from your savings account.
If you have opened your account at a general post office; you have to go there and access the financial details from the postal officials.
A PPF account has a competitive interest rate of 7.6 %, which is better than bank fixed deposits and are fully secured, unlike banks where the Fixed Deposits are guaranteed for Rs 1 lakh only in case of default.
Investing regularly every year for 15 Years is compulsory. Defaulting on your yearly payment may lead to discontinuity of the account, though the accumulation of interest continues.
Reactivation of your account can be done after paying the arrears and the penal amount. A PPF account’s tenure may be extended in multiples of 5 years, even after completing 15 Years.
Maximization of Interest of your PPF account
To get the maximum returns on your PPF investment, invest the planned amount in your account between the 1st and 5th of any month without fail for 15 Years.
You can advise your banker to auto debit funds during this duration every month. Do check your PPF account online to confirm the deposit.
If you have a Post Office PPF account don’t forget to pay the required sum by the 5th of the month. Interest is compounded annually and credited into your account on31st March every year.
The interest rate on your PPF account is calculated between the fifth and last day of the month on your lowest balance. Failing to invest within the suggested timeframe( 1st-5th ) will put you at a substantial loss.
Regular investment within the suggested days will garner a large corpus for your future. Your retirement days will prove to be a paradise on earth.
If you invest Rs 1,00,000 in A PPF account for 15 Years Pay your installments religiously between the 1st and 5th of the month. Your wealth accumulation will be a whopping Rs 28,32,196.00
As per the current PPF interest rate of 7.6%.This is an excellent return with a double benefit of Income tax exemption for the entire amount (principal and interest combined).
Prominent Salient Features
You can transfer your PPF account from one bank to another, one branch to another branch, from the bank to the post office and vice versa.
Calculation of 15 Years is calculated from the beginning of the first financial year.If your PPF account is opened in December’2017, the calculation of 15 years period will start from 1st April 2018.
The final amount will mature on 31 March’2033. The Indian Governments financial year being April to March.
PPF corpus cannot be attached against any decree of the court.
The Interest rate of PPF is limited to the yield of 10-year government bonds, which is an awesome security for your PPF corpus. You can open only one account in your name.
Under sec 80c of the Income tax act you are eligible for income tax exemption up to Rs 1,50,000. this includes investment in PPF account along with other financial investments attracting sec 80c benefits.
How to open an Online PPF account
Banks which accepts PPF Investments have options for online account opening. Some banks provide total solutions for online PPF account opening while some others partial facilities. To open an online PPF account, banks have enforced the following mandatory guidelines.:-
- You have to have a savings bank account at that bank
- Netbanking facility should be enabled on your cell phone.
- Your account has to be linked with your Aadhar Number.
- Your Cell phone should be linked to your Aadhar Number.
You can log into the netbanking portal of your bank and select the PPF account opening section. Your bank account number and personal details have to be uploaded on the banks portal
.Aadhar number verification is done by generating an OTP, which is sent on your cell phone. When you input the OTP number sent to your cell phone, your PPF account is opened online.
In the second process which is partially online, you have to populate the application form online, by filling in your personal details.
Download the form, print it, sign on the form and submit it to the bank where you want to open an account along with your KYC documents in hard copy.
Once this is done your PPF account is opened. Start investing regularly for 15 years and enjoy the fruits after the maturity date.