The Public Provident Fund (PPF) is a long-term investment scheme that falls under the Small Saving Schemes. It offers substantial returns to investors, with a maturity period of 15 years that can be extended for an additional 5 years. Individuals can invest up to Rs 1.5 lakh annually in this scheme.
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To maximize returns, it is advisable to deposit the money before or on the 5th of every month. Depositing the money after the 5th of the month can result in a loss of interest for that month. For instance, if an individual deposits Rs 1.5 lakh in PPF on April 20, they will only receive interest for 11 months in the financial year, resulting in a return of Rs 9,762.50 for the year 2023-24. In contrast, depositing the same amount on April 5 will earn a profit of Rs 10,650 for the same period.
The PPF interest rate has remained constant at 7.1 percent for an extended period. The government determines the interest rate each year, which is then credited to the account on March 31st but calculated monthly.
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The PPF scheme is a popular option for tax saving, with a maximum investment limit of Rs 1.5 lakh. As it falls under the Small Saving Schemes, it is tax-free. This scheme is an excellent choice for individuals who plan to invest for retirement or the long term.
