Maximizing Your Returns with PPF: Tips and Tricks

What is PPF?

Public Provident Fund (PPF) is a highly sought-after investment option for building a long-term retirement fund due to its low risk, moderate returns, and added tax benefits. PPF's attractive features make it a popular choice among investors. With an assured return rate of 7.1%, PPF's performance is on par with bank fixed deposits (FDs) in terms of nominal returns. Moreover, the additional tax benefits offered by PPF, subject to the investment cap of Rs. 1,50,000, make it more attractive than other investment options.

One of the most significant advantages of investing in PPF is that the deposits are government-guaranteed, making it a safer investment than other financial instruments like FDs. Furthermore, there is no age limit for opening a PPF account, making it accessible to both adults and minors. In the case of minors below 18 years of age, a guardian must operate the account on their behalf until they reach the age of 18. In conclusion, PPF is an excellent investment option for those looking to build a long-term retirement fund. Its low risk, moderate returns, and added tax benefits, coupled with the government guarantee, make it an ideal choice for conservative investors.

Benefits of PPF

1. Investment Option with Minimal Risk and Assured Returns

One of the biggest advantages of having a PPF account is that it is very safe. This is because the scheme is supported by the Indian government, which means the risk of losing your money is very low. Additionally, the returns you can get from the scheme are good. Another benefit is that if you have any debts that you are unable to pay, they cannot be seized by a court order.

2. Tax Benefits

It is completely tax-free. When you invest in a PPF account, you can get tax deductions under section 80C of the IT Act. The entire taxation of interest income is also prohibited. Wealth tax is completely waived on any balance due on a PPF account. Additionally, the entire value of your investment is exempt from taxes, making it a very efficient way to save on taxes.

3. Invest with Little Money and Earn Good Returns

You can start your PPF account with just Rs 500 and invest up to a maximum of Rs 1,50,000, depending on how much you can afford. You can make small monthly payments or one deposit every year. The interest rate for a PPF account is 7.1% and it's calculated every year, so your money can grow quickly over time.

4. Loan and Withdrawal

One of the best things about having a PPF account is that you can take loans against it. After maintaining the account for 3 years, you can borrow up to 25% of the balance, even though the account has a 15-year lock-in period. This is very helpful in case of emergencies. After 6 years, you can also start taking out some money from your account if you need it. If you can't afford to keep the account open anymore, you can also close it. This is another great benefit of having a PPF account.

5. Tenure

Once you have completed the 15-year lock-in period, you can choose to withdraw all the money from your PPF account. Alternatively, you can also extend the lock-in period in blocks of 5 years if you want to keep the account open and continue earning interest.

PPF interest rate for April-June quarter 2023

The PPF interest rate, on the other hand, has remained unchanged at 7.1%.

New rule to open PPF account

The Indian government has made it mandatory to provide PAN and Aadhaar numbers for investments in post office schemes like Public Provident Fund (PPF). This new rule was announced on March 31, 2023. Previously, it was possible to invest without disclosing your Aadhaar number. However, to invest in small savings schemes, you now need to have an Aadhaar enrollment slip or number.