5 reasons to open a PPF account
- Guaranteed return with safe investment
You will surely get the return, but the fact is, it is flexible. You will get fixed money every year, but it may vary. Previously the interest was 12% per annum, but afterwards it came on 8%. It again rises to 8.8% but finally the RBI decided to fix it at 8.7% per annum.
Since, the government is also supporting the PPF. Hence, it is one of the safest investments that anyone can have.
It does not hold rules of the court order as the account holder is under any kind of debt.
- Good tax break can be gained
It is free from tax and falls under the exempt-exempt-exempt category (EEE).
Under the section 80c, you will get tax benefits up to Rupees one and a half lakh once you are investing in a PPF account.
The interest that you will earn is also free of tax and you don’t have to pay anything from your interest.
The principal investment and the interest, both are added and you will get a final compound interest that is totally free from any kind of tax.
- Opening and maintaining is very easy.
One can easily open a PPF account in an SBI branch, provided the branch is authorized for handling such accounts. There are several other banks that are associated with the SBI and are fully authorized to open PPF accounts. Even the post office has also collaborated with the SBI.
If you are shifting from one place to another, your PPF account can also be shifted within the same bank and if the branch is permitted to handle PPF accounts.
An NRI can also open such accounts with everything functional. But, only in one condition, if he changes his citizenship, it is no longer liable.
- Wide investment flexibility
You can have a wide flexible investment. It starts from Rs. 500 per annum to Rs. 1.5 lakh per annum. So, if you are running short of money, you don’t need to close you account and stop investing.
Moreover, there is no need to rush as you don’t have to deposit the whole amount in a single investment. There are 12 different investments, one for every month. So, you can invest as much as you want, provided with the right time.
- You can save a lot of money
The most amazing fact about the account is that it is completely tax-free and an investor can stretch the time limit of investment up to 15 years. This is fully a long-term tax benefit tool with the maximum investor’s profit.
You can have a huge amount of money at a time. So, if you are planning for your child’s higher education, you can target and start saving. Or, if you are thinking after your retirement, you can save for a short term investment, say for 5 years.
Suppose there is an urgency of money before the maturity date. So, the person can simply withdraw the money after a time period of 5 years. He will surely get some benefits, but not as it was stated as in the agreement.