PPF Account

PPF offers fixed and guaranteed returns and has a long-term maturity period. This makes it is a suitable savings tool for financial goals that have a longer time horizon. Hence, PPF is a must for your retirement portfolio. You can invest up to Rs 1,50,000 per year in PPF and get tax exemption on that. The interest earned on the deposit is not taxed. The entire amount can be withdrawn on maturity and is tax-free in the hands of the subscriber. For self-employed people, who don’t get a salary and hence don’t enjoy the benefits of Employee Provident Fund, PPF is an extremely useful tax-saving instrument.

The interest rate on PPF is announced by the government every quarter. It is linked to the rates on government securities and changes accordingly. The interest on the PPF is calculated based on your balance in your account before the fifth of every month. So ideally, make your deposit before the fifth of the month to get maximum benefit. Any deposit made after that will not earn interest for that particular month.

The minimum amount that must be invested in a PPF account is Rs 500 and the maximum is Rs 1, 50,000 in a year. On maturity, the account can be extended for a 5-year period. There is no limit to the number of times the account can be extended. An individual can have only one PPF account in their name. However you can open a PPF account in your minor child’s name. When doing this please remember that the total investment in both PPF accounts should not exceed Rs 1,50,000 in a year. You can also invest in your PPF account online through internet banking!