The Public Provident Fund (PPF) program is a long-term investment option that pays a competitive interest rate and returns. The interest and refunds generated are not subject to income tax. This program requires the opening of a PPF account, with the amount contributed during the year being claimed under section 80C deductions.
Importance of Public Provident Fund account
For those with a minimal risk appetite, a PPF account is one of the greatest investing alternatives.
The PPF is a government-backed program with no market-linked investment. As a result, it provides assured returns to many people's investing demands.
PPF accounts are employed as a diversification strategy for an investor's portfolio because the returns are set. Additionally, they provide tax advantages.
How to open a PPF account
A PPF account can be opened at any Post Office or any nationalised bank, such as the State Bank of India or the Punjab National Bank, among others. Even private banks such as ICICI, HDFC, and Axis Bank, among others, are now permitted to provide this service.
- You need to submit the below-mentioned documents:
- Duly filled account opening application form
- KYC documents such as Aadhaar, Voters ID, Driving license, etc.
- Residential address proof
- Nominee declaration form
- Passport size photograph
Following the submission of these documents, you can make Minimum Deposit In PPF towards the account's establishment.
Essential Features of PPF
- Tenure: The PPF has a 15-year minimum term, which can be extended in 5-year increments if desired.
- Investment Limits: Each financial year, PPF provides for a minimum investment of Rs 500 and a maximum investment of Rs 1.5 lakh. Investments can be made in one single payment or over a period of up to 12 months.
- Opening Balance: With just Rs 100, you may start an account. Over Rs. 1.5 lakh in annual investments would not generate interest and will not be eligible for tax benefits.
- Deposit Frequency: PPF deposits must be made at least once a year for 15 years.
- Mode of deposit: Cash, check, demand draught (DD), or online fund transfer are all options for depositing money into a PPF account.
- Nomination: A nominee for a PPF account can be designated at the time of account opening or later.
- Joint accounts: A PPF account can only be held in one person's name. It is not possible to open a joint account.
- Risk factor: PPF offers guaranteed, risk-free profits as well as total capital protection because it is backed by the Indian government. The danger of investing in a PPF account is negligible.
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