If you are above 25 years of age and never heard about PPF than you are missing an opportunity to earn good returns on your investment as PPF has many benefits and one should start making small investment into PPF as early as possible so to get maximum benefit. Given below are some important points about PPF –
- The full form of PPF is Public Provident Fund.
- Public Provident Fund account can be opened by an individual or a minor through the guardian, however one cannot open joint account and also HUF cannot open PPF account.
- One can open PPF account either through post office or through banks which are eligible for opening Public Provident Fund account.
- PPF Limit or the amount which one can deposit into PPF account is minimum 500 rupees and maximum PPF limit is 100000.
- PPF is opened for a period of 15 years, in other words the duration of it is 15 years. After completion of 15 years it can be further extended for a period of 5 years.
- The current rate of interest on PPF is 8 percent per annum which is proposed to be increased to 8.60 percent and it the rate of interest compounded which means you also get interest on interest after 1st year.
- One can withdraw from PPF after five years from the end of the year in which the initial subscription was made, so for example if you have opened the PPF account on 1st April 2007 you can withdraw only after 1st April 2012.
- Investment in PPF is tax deductible and also the interest earned on PPF is not taxable which makes PPF even better than fixed deposit as interest on fixed deposit is taxed and therefore though rate of interest on fixed deposit is higher but if one calculate it after tax than PPF gives higher return than fixed deposit.