Jul 072015
 

If you are looking for an affordable and attractive small saving scheme, Public Provident Fund (PPF) could be a great option to think about.  The scheme was launched by Central Government in 1968 and since then has been quite a popular mode of investment and tax saving.  There are a number of reasons why you can consider investing in PPF and many Advantages and Benefits of Public Provident Funds, most of which would be covered in this article.

Advantages and Benefits of Public Provident Funds

Advantages and Benefits of Public Provident Funds

Below is the list of the Advantages and Benefits of Public Provident Funds:

  1. No specific eligibility and simple process of account opening

This is the first Advantages and Benefits of Public Provident Funds. One of the general advantages of PPF is that there is no specific eligibility for opening a PPF account.  Any Indian national, irrespective of age and income class can open a PPF account in any bank or post offices.  However, the scheme does not cover Indians who are NRIs at the time of opening of account. for more information you can read article Public Provident Fund FAQ. You can walk up to any of the authorized banks or post offices with just Rs 500 and an identity proof and get a PPF account opened for yourself.

  1. Lock-In period for your money to grow

There is a lock-in period of 15 years attached to PPF accounts.  That means, you can’t touch your investment for this period, which makes sure that your money grows without any hindrance.  Most of the small savings of common man are withdrawn at some point in time in need just because there is no such lock in period.

But, PPF assures that you just invest for first 15 years and take back the lump sum amount and cater to a major responsibility with this accumulated amount.  That is why young parents looking for a financial security for themselves or their kids opt for PPF. This is the best Advantages and Benefits of Public Provident Funds.

  1. Unmatched Rate of Interest

Exclusive and unmatched rate of interest is one of the core reasons why people prefer PPF against all other small saving schemes.  The rate of interest for PPF is not fixed and keeps changing every fiscal year.  However, one thing that has never changed is that PPF comes with the highest rate of interest as compared to other saving investment schemes.  The current rate of interest for PPF is 8.7%. Good intrest rate male the PPF more popular and it is the best Advantages and Benefits of Public Provident Funds.

  1. Complete Tax Exemption (EEE Status)

PPF enjoys EEE tax exemptions under Section 80C of Income Tax.  An EEE tax exemption means that the annual investment in your PPF account, the interest earned on your PPF account and the lump sum proceeds out of your PPF account are all exempted from Income Tax. This is the one of the best Advantages and Benefits of Public Provident Funds.

EEE tax exemption coupled with highest rate of interest makes PPF an unavoidable choice among small saving investment schemes.

  1. Easy to operate account

Operating a PPF account is as easy as maintaining your normal saving account.  There is no fixed amount of investment that you are bound to invest in your account.  You can choose to deposit Rs 500 in the first month of the year and deposit nothing until the end of the year.

You can deposit any amount falling within Rs 500 and Rs 1.5 lakh anytime during the fiscal year.  The only cap being that you can deposit up to a maximum of 12 times in your account during a given fiscal year.

This makes it quite a convenient option for anyone since I may deposit Rs 200 today and Rs 25,000 next month, and so on, depending upon how much cash flow I have.

PPF account also gives your convenience to make contributions through your net banking account.  All you have to do is log in to your saving account and attach your PPF account with it, which would enable you to transfer any amount of money to your PF account.

  1. Loans and Withdrawals against PPF investment

How about this?  You can take loans or make partial withdrawals against your PPF account.  This is certainly one of the major benefits of PPF account.  In my perception, a PPF account is your Mini-Bank.  You keep depositing whatever money you have and when you need it, you take a loan against your investment and repay it later.

This way, you create a financial system for yourself and manage your finances accordingly.  Moreover, you can make partial withdrawals against your PPF investment effective 7th fiscal year. You can also read article Withdrawal Rules in PPF (Public Provident Funds)

  1. Exemption from Debt, Liability and Wealth Tax

The amount accumulated in your PPF account is exempted from any debt or liability that may be put on your by the court.  Even if are convicted on debt by the court, your PPF proceeds would remain untouched.  Moreover, you do not have to pay any wealth tax on your PPF proceeds as it is completely exempted from wealth tax as well.

  1. PPF is a Risk-Free investment

PPF is a government backed scheme and thus your can rest assured about your money.  PPF is 100% Risk-Free.

  1. PPF account can be opened for minors too

Very important Advantages and Benefits of Public Provident Funds is PPF for Minor. If you are a young parent wanting to secure the future of your child, you can open a PPF account in the name of your child and keep investing whatever you can.  The account would mature exactly at a time when you would need a lot of money for your child’s education or marriage.  Moreover, you can claim tax exemption on the investments made towards your child’s PPF account along with claiming tax exemption against your own PPF account.

Every scheme has its own advantages and disadvantages and it is best to choose the one which meets your specific needs.  However, considering the rate of interest, lock-in period and EEE tax exemptions; we can surely say that PPF holds the number position among all other small saving investment options available in India.

In our article Advantages and Benefits of Public Provident Funds, we have to cover all the Advantages and Benefits of Public Provident Funds. if you have any query related to PPF so send us commnet.

  4 Responses to “Advantages and Benefits of Public Provident Funds”

  1. Query: if I have my and my child’s PPF account, the limit is still 1.5 lakh p.a for both or 1.5 lakh p.a for each account(i.e, can I deposit 3 lakh.p.a totally) ?

    • yes you can deposit Rs 3 Lakh in total. 1.5 For you and 1.5 for your son. But if you are doing so just for the sake of 80C exemption then the limit for 80C is 1.5 Lakhs only.

  2. my query is if i ony deposit 1 lakh, only this year and abandon depositing in ppf account (i.e only deposit minimum 500/- annually for running the account) then after 15 years how much will get???

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