Reasons To Start & Invest in Public Provident Fund (PPF)

3 minsOctober 17, 2016

Nothing spells safety and security of your hard-earned money as much as a Public Provident Fund (PPF) account does, and this is primarily what makes it such an attractive investment option across all categories of investors, whether you’re a newbie or a seasoned investor. With the stability of a fixed deposit but sans the TDS component, it is a winning proposition for those with a low risk appetite.

Why not familiarise yourself with this investment option and see whether it is for you? Here are a few reasons as to why you should invest in PPF:

  • Invest even with a small sum:
    • The minimum amount you need to invest is Rs. 500 in a maximum of 12 installments with a cap of Rs. 1.50 Lacs in a financial year. This makes it simpler for even an early investor to invest the amount that you are comfortable with.
  • Account validity:
    • The validity of a PPF account is 15 years, which gives you a fairly long term in which to reap the benefits. Once the existing account expires, you can choose to open a new account at the end of the term.
  • Tax benefits:
    • One of the most important features is the tax benefit that a PPF account offers the accountholder. Remember, the amount accumulated is tax free at all stages, i.e. not only the principal, but the interest earned as well as the withdrawals at maturity are tax free, under Section 80C of the Income Tax Act, 1961.
  • Loan against PPF:
    • For those individuals looking to avail of a loan, you can avail of one against your PPF account post completion of the third year, excluding the year of deposit. The interest levied on these loans is relatively lower compared to other loan products such as personal loans – it currently stands at 2 percent more than the prevalent PPF interest rate – with repayment options either in a lump-sum or in installments.

I was always under the impression that a monthly provident fund was more than enough for my savings. It was only when I started investing in PPF that I realized its advantages. It is flexible and helps in Tax-saving as well. I recommend this to all.

Utkarsh Pandey, 38, Accountant

Investing regularly in PPF comes with its benefits, and investing a small sum each month is a prudent move. Now you can open PPF accounts not just with public sector banks, but with Axis Bank as well! Here, you have the option to transfer funds directly from your savings bank account to your PPF account.

So, invest in PPF today and plan towards a stable financial future.