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Investment Tips: Looking for a safe investment option amid the turmoil in the market. In such a situation, investing in Public Provident Fund (PPF) can fulfill many goals at once. PPF is a good long term investment option for any investor. Investing in Public Provident Fund is not only safe, but it also offers tax exemption benefits.
You can accumulate a huge corpus by investing a small amount every month in PPF. Currently, the scheme is getting annual interest at the rate of 7.1 percent.
what are the advantages
There are many benefits you can avail of investing in Public Provident Fund (PPF). The biggest advantage in this is the tax exemption. The tax exemption on investment in PPF is available in the category of EEE. EEE category means that PPF is completely tax free. The money invested, the interest earned on it and then the total amount received on maturity are not taxable. The government revises the calculation of interest in PPF every three months. However, the interest is calculated annually. The most important thing about the PPF account is that it cannot be confiscated even in the event of any court order, debt or other liability.
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The PPF scheme is run by the government. Its interest is also decided by the government itself. Therefore, there is a government guarantee on investment in the scheme.
small investment
Anyone can invest in Public Provident Fund (PPF). For this, you can open a PPF account in any post office or bank. The account can be opened by a parent or guardian on behalf of the minor. You can open a PPF account with an investment of just Rs 500. You need to deposit at least Rs 500 every year in PPF account. Maximum 1.5 lakh rupees can be invested in a year.
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Lock in period is 5 years
You cannot withdraw money in PPF account for 5 years after opening it. Because, the lock-in period of 5 years has been kept. After 5 years, money can be withdrawn by filling Form 2. However, if the money is withdrawn before the age of 15 years, one percent will be deducted from the total fund.
Loan facility as well
Loan can also be taken against the amount deposited in PPF account. The loan can be applied for on completion of one year of the financial year opening the PPF account. Loan can be taken from this account till the end of 5th year. You can take a loan of 25% on the total deposit. The interest of the loan is only 1 percent more than the interest on PPF.
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Tags: Pension fund, pension scheme, Personal finance, PPF, PPF account
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