The Public Provident Fund (PPF)

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The Public Provident Fund (PPF) is a long-term savings scheme offered by the Government of India. It is designed to encourage individuals to save for their long-term financial goals, such as retirement, education, or buying a house. Here are some key features of the PPF scheme:

1. Tenure: The PPF scheme has a lock-in period of 15 years. After that, the account holder can choose to continue investing in the scheme or withdraw the funds.

2. Contribution: The account holder can contribute a minimum of Rs. 500 and
a maximum of Rs. 1.5 lakh per year to the PPF account.

3. Interest rate: The interest rate on PPF is fixed by the Government of India and is currently set at 7.1% per annum (as of April 2021).

4. Tax benefits: The contributions made to the PPF account are eligible for tax deductions under Section 80C of the Income Tax Act, up to a maximum limit of Rs. 1.5 lakh per year. The interest earned on the PPF account is also tax-free, making it an attractive option for tax-saving purposes.

5. Loan facility: After completing three years of continuous investment, the PPF account holder can avail a loan against their accumulated balance, subject to certain conditions and restrictions.

6. Nomination: The account holder can nominate one or more beneficiaries to receive the maturity amount or balance in case of death.

Overall, the PPF scheme offers a safe and secure investment option with attractive tax benefits and long-term financial security for individuals looking to save for their future goals.

Tax Benefits:

Exemptions from income tax apply to the principal amount invested in an account under PPF. Following section 80C of the 1961 Income Tax Act, you can claim the absolute value of the investment for a tax waiver. However, it is essential to remember that Rs. 1.5 Lakh cannot be more than the entire capital invested in one financial year.

This tax advantage is also accessible cumulatively for all 80 C investments.
Total PPF investment interest is excluded from any tax computation as well.

Therefore, when maturity has been completed, the total sum paid from a PPF account must not be taxed. This strategy attracts numerous investors in India from the public fund system.

Withdrawal:

If an individual wants to withdraw money from a PPF account, there are specific stipulations to follow.
The principal amount invested in such schemes shall be subject to the obligatory 15-year lock-in. Partial pullout may occur in the event of an emergency relating to particular end uses. However, after five years of activation of the account, this sum may only be taken.

You can withdraw up to 50 percent, whichever is lower, from the entire sum on your loan at the end of the fourth or at the end of last year.

Investors should understand that monies put in a PPF account cannot be wired until the completion of the maturity period. Anyone who seeks long-term risk-free investment choices that deliver reliable returns can easily choose the government-supported instrument.

Conclusion:

The public provident fund is the best risk-free investment. People are showing a lot of interest and do create their PPF account to earn interest and money with the help of a public provident fund.