Public Provident Fund- Best way for investment:
Whenever we heard the word “PPF”, the first thing that is coming in the mind is
that it is useful in tax saving purpose. If we compare the benefits of investment in
the PPF then it is really the best way for tax saving.
What are basic features of PPF?
– Each and every person can open the account and can invest the amount
– Minimum amount of investment is just Rs. 500/-
– Higher rate of interest as compare to saving account
– Maximum amount can be invested is Rs. 1,50,000/-
– According to new rule, every PPF account holder must include guardian
details for their PPF Account.
Partial withdrawal from PPF account:
Although withdrawal from the public provident fund (PPF) is not permitted as it
does not come under normal practice. But there is an option of partial withdrawal
in the financial emergency scenario with the subject to certain rules.
.Withdrawals from the public provident fund (PPF) account are
permitted only after completion of 7th years from the day of
commencement of the public provident fund (PPF) account.
.Only 50% of the closing balance at the end of the 4th year prior to the
year when the money is being withdrawn or 50% of the closing
balance of the previous year, whichever is lower is allowed.
.Only a single withdrawal transaction is allowed.
Facility of Loan on PPF:
– The investor can apply for the loan from PPF amount from the third
year till the sixth year.
– The amount of loan avail maximum of up to 25% of the balance in your
account at the end of the second year preceding to the year in which the
loan is applied.
– The rate of interest charged on the loan amount is (generally it is 2%
higher than the PPF interest rate)
If the PPF account is discontinue then it can be restore by paying the penalty of Rs.
50/-to get it regularize.
Benefits in future:
.PPF account is benefited in Retirement plans
.In Child education
.In availing loan
.or Buying a car/home
.in Tax benefit
.The investment is eligible for tax exemption.
.The Interest income is exempt from tax.
.The redemption proceeds are also exempt from tax.