Public Provident Fund (PPF) is one of the most popular long term savings schemes.
public provident fund (Public Provident Fund) i.e PPF Most Popular Long Term Savings Schemes (Saving Schemes) is one of the. Better return on small savings by investing in it (Return) can be earned. This is a government-backed savings scheme, so it has better interest rates. (Interest Rate) With good return on investment. The benefit of this scheme can also be taken to meet the financial needs at the time of retirement. It has a period of 15 years. However, the subscriber can extend the same for a further period of five years by giving the application. In some cases partial withdrawal is also allowed.
There are many benefits in PPF in the form of interest rate, security and tax. In this, loan and partial withdrawal facility is also available after few years of account opening. Let us tell you the benefits of Public Provident Fund or PPF in detail.
better interest rate
The central government revises the interest rate for the PPF account every quarter. The interest rate on PPF has generally been 7.6 per cent to 8 per cent. Considering the overall economic situation, it may increase or decrease somewhat.
For the current quarter i.e. the fourth quarter of the financial year 2021-22, the interest rate on PPF account has been fixed at 7.1 percent. It is compounded on an annual basis. Compared to the interest rates on fixed deposits in many banks, the subscribers in Public Provident Fund are getting higher interest.
extend the period
There is a tenure of 15 years for the subscribers in PPF. After this the investor can withdraw the amount. However, subscribers can also apply for further extension of account for 5 years. Apart from this, they can choose whether they want to continue with the account with contribution or not.
Tax Benefits on PPF
Public Provident Fund Scheme offers tax benefits under section 80C of the Income Tax Act. Tax deduction up to Rs 1.5 lakh is allowed on the amount invested in the scheme. PPF follows the EEE (exempt-exempt-exempt) taxation model, which means that both the interest earned and the maturity amount are tax exempt.
investment security
PPF is a savings scheme supported by the government. Therefore, the subscribers get the security of investment in this. In general, loans that are afraid of taking on any risk, invest in Public Provident Fund. In this, there is a guarantee of the government on the interest earned, due to which it is also safer than the interest of the bank. In comparison, bank fixed deposits are guaranteed only for investments up to Rs 5 lakh.
loan facility
In the Public Provident Fund ie PPF scheme, investors can take a loan against their PPF account. The loan can be availed from the third year to the sixth year of account opening. This is especially beneficial for investors who want to apply for short term loans without pledging any collateral security. Talking about the maximum amount of loan against PPF account, then at the end of the second financial year after the year in which you are applying for the loan, the loan can be taken at 25 percent of the balance amount.
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