Public Provident Fund (PPF) is one of the most popular tax-saving schemes.
Public Provident Fund (PPF) Benefits: Public Provident Fund (PPF) is one of the most popular tax-saving schemes. In this, you can use your savings and get returns on it. This scheme is from the government and it gives excellent return on investment. People can also use this scheme to meet their financial needs after retirement. Its duration is 15 years. Which can be extended for a further period of five years. In some cases partial withdrawal is also allowed.
There are many benefits of PPF regarding interest rate, security and tax exemption. Let us know about the benefits of investing in PPF.
better interest rate
The central government changes the interest rate for PPF accounts every quarter. The interest rate on PPF has always been between 7 to 8 percent. Currently, the interest rate on PPF account is present at 7.1 per cent. It is compounded on an annual basis. Compare this with the fixed deposit (FD) interest rates of many banks, then customers are getting the benefit of more interest in PPF.
extend the period
The duration of the scheme is 15 years. After this, he can withdraw the amount, which comes under the purview of tax exemption. But customers can also invest to extend the investment for a further period of five years. And they can also choose whether they want to continue contributing or not.
Tax Benefits on PPF
Public Provident Fund offers tax benefits under Section 80C of the IT Act, 1961. Income tax deduction of up to Rs 1.5 lakh can be taken on the amount invested in the scheme. PPF follows the EEE (exempt-exempt-exempt) model of taxation, which means that both the interest earned and the maturity amount are tax exempt.
Since it is backed by the government, the investment of the customers in the Public Provident Fund remains safe. Generally people avoid taking any risk and in this they get the benefit of stable interest rate. It has a sovereign guarantee on the interest earned, which makes it more secure than bank interest. In comparison, bank fixed deposits are only insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs 5 lakh.
Customers can also take loan with PPF account. The loan can be availed in the third to sixth year of account opening. This is especially beneficial for customers who want to apply for a short term loan and do not need to pledge any collateral securities for the same.
read this also: You will be able to make payments without internet, the government is going to change the rules for instant transactions
read this also: Buy a candle today and bring it home, in view of the shortage of coal, electricity will be cut in Delhi for several days.