The Public Provident Fund (PPF) stands out as a highly favoured choice for individuals in India looking to make tax-saving investments. Its enduring popularity can be attributed to various compelling reasons:
Triple tax exemption: PPF enjoys the exempt-exempt-exempt (EEE) status, ensuring that investments, earnings, and maturity proceeds remain entirely exempt from taxes. This feature sets it apart as notably appealing compared to other tax-saving schemes.
Guaranteed returns: Supported by the Government of India, PPF provides stable and attractive interest rates, currently standing at 7.1% per annum (as of January 2024). While it may not offer the highest returns available, it delivers reliability and predictability for long-term financial objectives.
Long-term investment: The mandatory 15-year lock-in period promotes disciplined savings and aids individuals in achieving enduring financial goals such as retirement.
Accessibility: With a modest minimum investment of Rs. 500 and a maximum limit of Rs. 1.5 lakh per year, PPF is within reach for individuals across all income levels.
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Flexibility: After the 7th year, PPF allows partial withdrawals, and loans can be obtained against the balance after the third year, providing a degree of liquidity during challenging periods.
Safety: As a government-backed scheme, PPF ensures complete security for invested funds, minimizing risk when compared to investments linked to the market.
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How to open a PPF account?
The PPF scheme, unaffected by market volatility, provides consistent and assured returns, making it a favoured retirement savings option for investors who prefer low risk. Additionally, the scheme enables individuals to avail income tax benefits on the invested capital under Section 80C of the Income Tax Act, 1961.
You can initiate your PPF investment both online and offline depending on your convenience.
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Online opening of PPF account
To initiate the online opening of a PPF account, it is necessary to hold a savings account with a participating bank or post office and have activated internet banking or mobile banking services.
Step 1: Access your account through either the Internet banking or mobile banking platform.
Step 2: Locate the “Open a PPF Account” feature and click on it.
Step 3: Choose the “Self-Account” option if you are opening the account for yourself. Alternatively, opt for the ‘Minor Account’ option if you are opening the account on behalf of a minor.
Step 4: Input the necessary details in the application form and double-check the accuracy of the entered information.
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Step 5: Specify the total amount you intend to deposit in the account for each financial year.
Step 6: Establish standing instructions to enable automatic debiting of the specified amount from your savings account and crediting it to the PPF account at your preferred intervals.
Step 7: Submit the application. An OTP will be sent to your registered mobile number for transaction authorization.
Step 8: Input the received OTP to validate your identity.
Step 9: Your PPF account has been successfully created! A confirmation message will be shown on your screen, and an email containing all the details will be sent to your registered email address to confirm the successful account creation.
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Offline opening of PPF account
You have the option to open the PPF account through offline means, and the process is as follows.
Step 1: Complete the PPF application form by providing the necessary information.
Step 2: Collect all pertinent documents required to accompany the application.
Step 3: Head to the bank or post office of your choice to initiate the account opening process. It is advisable to have a savings account with the respective bank or Post Office branch for a seamless PPF account opening experience.
Step 4: Present the required documents to the representative at the bank or Post Office branch.
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Who can open a PPF account?
Establishing a PPF account is a simple process, yet adherence to specific eligibility criteria is crucial.
Indian citizens: Only individuals holding Indian citizenship are eligible to open a PPF account in their name.
Minors: Parents or legal guardians have the authority to open a PPF account on behalf of a minor.
Foreigners: Non-Resident Indians (NRIs) who were originally resident Indian citizens at the time of opening the account can maintain contributions for the entire 15-year duration. However, they are not permitted to initiate a new account after acquiring NRI status.
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A person is allowed to open just one PPF account anywhere in the country, whether it’s with a bank or a post office. Additionally, this account can be extended indefinitely without any limitations. In general, the PPF stands out as a robust choice for individuals looking for a secure, safe, and tax-efficient method to accumulate wealth, particularly for long-term objectives like retirement.
