In today’s time, everyone should save something for their future, and invest their saved amount in some good place. People invest in different schemes according to their understanding and need, in some schemes they get more and some less interest rate, one of them is ppf scheme (Public provident fund) in which you also get good interest rate. And there is no risk on investment in it.
On PPF account, you get the benefit of tax along with good interest rate. In ppf as compared to other schemes like RD and FD account money grows faster.
The most important thing is that you do not have to deposit lump sum money in PPF account. You can also continue this account by depositing Rs 50-50. Apart from this, what happens if you have a PPF account? And what is the full form of PPF and the benefit of PPF account? Giving detailed information about it.
What is PPF Account (PPF Account Kya Hota?)
PPF Full Form
The full form of PPF is Public Provident Fund. Whereas in Hindi it is called Public Provident Fund Scheme.
This scheme, started in 1968, became very popular among the people, especially among those who cannot take the facility of any EPFO (Employee Provident Fund), they started their investment in this scheme.
The basic objective of this scheme was to encourage individuals to invest. It is a long term investment plan, which offers attractive interest rates. Which gives you a good return on completion of the maturity period.
Along with this, by investing in this scheme, you can also get tax exemption up to Rs 1.50 lakh every year.
PPF was first introduced to the common man in 1968 by the National Savings Institute of the Ministry of Finance. Since then it is quite popular among investors and it continues to be a better way to build wealth among investors.
If you are an Indian citizen then you can open a PPF account. You can open this account in any bank or post office by depositing only 500 rupees.
After this, you can deposit a minimum of Rs 500 per year and a maximum of Rs 1 lakh 50 thousand. This account is operated for 15 years, but in times of high need, you can withdraw the money prematurely or you can also take a loan on it.
Reason for Popularity of PPF (Why is PPF So Popular?)
In today’s time, the biggest need of the people is that their investment should be in the right place and it should be completely risk free and there should not be any kind of risk in it. The reason why PPF is also popular is that it is one of the safest investment products. That is, the Government of India guarantees your investment in the fund.
The government revises the interest rate on the PPF account on a quarterly basis. Apart from this, you are also given tax benefits on investing in ppf.
PPF Interest Rate (What is the Interest Rate on PPF?)
The interest received on PPF is calculated every quarter, which may change, currently the rate of interest on PPF account is 7.1% per annum. Which is paid on 31st March. Interest is calculated on the minimum balance between the end of the fifth day and the last day of every month.
Benefits of PPF Account Opening
Interest Rate
On PPF, you get good interest as compared to other schemes, which are reviewed by the government every quarter.
Tax Rebate (Tax Benefits)
On the amount invested in PPF, you are given tax exemption under 80C on investments up to 1.50. It comes under exempted (EEE) category. The accumulated amount, interest received and maturity amount are also tax-free on withdrawal.
Period of Investment
PPF comes with a fixed lock-in period or investment period of 15 years. You can extend the tenure in blocks of 5 years after the initial tenure is over.
You have to deposit a minimum of Rs 500 per year in this account, while the maximum can be deposited up to Rs 1.50,000 lakh.
A person can open only one ppf account in his name.
Compounding Benefits
Every year you get compound interest on the amount deposited by you. With every year, your interest income increases due to increasing deposits.
Withdrawal of money (PPF Money Withdrawal)
Investment in PPF is made for 15 years. You can make partial withdrawals at the end of the sixth year of investment, if required.
Apart from this, if you withdraw only once in a year, then at the end of the fourth year, you can withdraw only 50% of the amount in the account.
All the money invested can be prematurely withdrawn only after 5 years.
If you do not want to withdraw the ppf money, then you can also take a loan on it. Loan can be taken between 3rd and 5th year on PPF account and partial withdrawal can be made after 7th year only for emergency.
Why You Should Open PPF Account
The Public Provident Fund account is ideal for investors who want to avoid risk. The scheme is meant for guaranteed returns and thus protects the financial needs of investors in India. The amount invested in the PPF account is not affected by the stock market, but the government does revive it every three months and hence it
How to Open a PPF Account
As we told earlier, you can open ppf account both online and offline. Just if you are eligible for ppf account then your ppf account will be opened easily.
Individuals who wish to open a PPF account through online mode must first visit the website of the chosen bank or post office.
Those who want to open ppf account offline, they have to go to the nearest post office or the chosen bank and fill the application form along with the required documents.
For example, here we are telling you how to open PPF account online in State Bank of India (SBI), its steps are as follows-
First of all you have to search onlinesbi in google, after that you will reach sbi’s site.
Log in to SBI’s Internet Banking Portal http://www.onlinesbi.com with your netbanking userid and password.
In the submenu in the Deposit tab above, you will see the option of PPF Account.
On clicking, the New PPF Account page will open, where your name, address, CIF number and PAN card details will be shown already filled.
Enter your bank account number and branch code from which you want to make payment for PPF account. After that click on the button ‘Get Branch Name’.
Your personal and enrollment details will be displayed for verification. After that you have to click on the option of ‘Proceed’.
The account number will appear on the screen as soon as your PPF account is opened immediately.
Nirmal is a NISM Certified Derivative Trader & the Founder of InvestandEarn.net (Financial Blog). He entered the world of Equity research to explore his interests in financial markets having 5+ Years of Experience in Share Market Trading & Investing. Nirmal frequently writes about Share Market Trading & Investment and publishes his personal view on the market. Drop him a mail at nirmal.jaysval@investandearn.net.
