The government is giving huge interest opportunity without imposing tax. No TDS or income tax will be deducted.
Are you looking for an investment plan that has low risk and tax free returns? If yes, then Public Provident Fund (PPF) can be a great option for you. PPF is a popular investment scheme run by banks and post offices. Under this, both the investment made and the interest earned are tax free.
How does PPF work?
Any investor can make large investments in a financial year or invest in installments. It gives 7.1% interest which is compounded annually.
Minimum and Maximum Annual PPF Investment
The minimum investment can be made up to ₹500 while the maximum can be made up to ₹1.50 lakh in every financial year.
tax benefits of ppf
Under Section 80C, investors can avail tax benefits on deposits up to ₹1.50 lakh. The interest earned and the fund amount are also tax free.
ppf account extension
After 15 years the account can be extended with or without investment. On maturity the investor has three options:
- Closing the account and receiving payment.
- Maintaining the account without any new investment.
- Option to extend the account for further blocks of 5 years.
ppf withdrawal
After 5 years, the PPF account holder can make one withdrawal per financial year.
Premature closure of PPF account
Premature account closure is subject to certain circumstances such as life crisis, higher education or change of resident status.
ppf calculation
If an investor invests ₹1.50 lakh every year between April 1-5, the total amount including estimated interest can be increased by extending the account for a period of 15 years.
Thus, investing in PPF with precise planning and understanding can make your financial future secure. Remember, always do your research before investing.
Disclaimer: This is not investment advice. Please consult a knowledgeable expert for financial planning.
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