The government has increased the interest rate on all the small savings schemes but not on the PPF. The provident fund comes with 15 years of long tenure. The interest rate for the provident fund for the quarter of April to June 2023 is 7.1% which is the same as the past 3 years i.e April 2020.
In spite of no rise or increase in the interest rates of the PPF schemes still, PPF is known to attract many people as people are free from all the taxes in both the new and old tax arrangements.
When we look at the old tax arrangements, the people who invested their money in PPF were also considered for tax deductions under Section 80C of the Income Tax Act of up to ₹1.5 lakh per annum. The PPF rates are always on the higher side as we compare them to the various fixed deposit interest rates offered by the banks.
All the interest rates are always applied to all the PPF investments amount quarterly. The interest is usually deposited or credited to the investor’s account at the end of the fiscal year which compounds annually. The interest on the PPF is calculated between the lowest balance on the fifth day and the last day of the month.
So if you want to ever invest in the PPF you should always do it on or before the fifth of the month. The maximum and minimum limits for investing in a PPF account are ₹1.5 lakhs and ₹500, respectively.
Important features of the PPF account
- PPF refers to an investment scheme that is completely secured and is offered by the government.
- PPF has a very long lock duration of 15 years, and after that, if the account holder wants to extend the duration, they can do so for another 5 years.
- It’s a very good tax-advantaged instrument as the amount invested, the interest generated, and the total maturity amount are all tax-free.
- You can open a PPF account with as little as Rs 500 and as much as Rs 1,50,000 every year. So you don’t need a large sum of money to open a PPF account. It also comes with the advantage of not making the deposit each year to keep your account active.
- After three years of saving in a PPF account, you can borrow against your invested amount.
- A PPF account can be created in the name of an individual or, in the case of a minor, as a guardian.
- In the case of the account holder’s death, the entire accrued sum is given to the nominee, which is referred to as a death benefit.
- PPF accounts may only be opened by Indian nationals. NRIs and HUFs.
- Account holders can deposit either regularly or once a year in a single sum.
Also Read:
PPF Investment: A Short Explanation on How To Make ₹1 Cr
PPF: Features, Key Benefits, Eligibility, Documents Needed
