What is PPF Account?
PPF is an abbreviation of "Public Provident Fund". It is a scheme of the Central Government of India offered for investment which not only generates guaranteed returns but also gives tax rebate under section 80C of Income Tax.
Any resident Indian citizen can open a PPF account who can be a salaried employee, self-employed, businessman, professional or any other person. It can also be opened in minor's name in the capacity of guardian of the minor by submitting application on Form A.
Highlights of PPF account
- It was originated in 1968 under the Public Provident Fund ( PPF ) Scheme, 1968.
- It is considered to be the best debt option available after Employees Provident Fund.
- It is very safe investment as it is a completely government backed scheme.
- Availability of flexible investment options i.e. in instalments or lump sum.
- It is opened for a minimum period of 15 years which can further be extended for a minimum period of 5 years.
- Minimum deposit in PPF account is Rs 500/- and maximum Rs 1.5 lakh can be deposited in one PPF account every year.
- Only one PPF account can be opened in one name.
- It offers EEE tax benefit to the investors which means, the contributions made to PPF Account, the interest earned on the PPF account and the maturity proceeds of the PPF account are all tax exempted under Section 80C of Income Tax.
- It offers the highest rate of interest among all other general small saving schemes in India and the current interest rate on PPF account is 8.1% compounded annually. This interest rate is governed by Ministry of Finance from time to time.
- Interest earned in the PPF account can be redeemed only after maturity.
- Loan facility in PPF is available.
- PPF account canít be closed before maturity except on the occasion of death of the account holder.
- The balance in a PPF account cannot be attached under a court decree.