Public Provident Fund

Public provident fund or PPF is an investment option that has been extremely popular with Indians across generations. The reasons for its popularity are many. The major reason why PPF is considered as a preferred choice can be attributed to it being a safe investment option.

The interest rate is an attractive 8 % PA and the invested amount can be claimed under Section 80C to lower your tax liability. Not only this, the interest earned on invested amount is also exempt from tax.

The lock-in period is 15 Years, after which you can choose to withdraw your corpus. You can keep the scheme live by extending it by 5 years thereafter as per your requirements. The minimum amount that needs to be deposited is just Rs 500 and the maximum amount is capped at Rs 1.5 Lakh annually. You can either deposit this amount in a lump sum mode or choose to make deposits in 12 installments. Please note that an amount more than Rs 1.5 Lakh will not be eligible to earn interest as well as can’t be used to claim tax exemption.

Any Indian citizen can avail benefits of this scheme, however, HUFs and NRIs are not eligible to open a PPF account. You can hold only one PPF account per person and joint accounts are not allowed. At the time of account opening however, you can assign a nominee.

A very interesting fact about PPF money saving scheme that many investors are unaware of is that you can take a loan against the amount you invested in PPF. This loan can be availed between the 3rd and 5th Year . The maximum loan amount you can avail is 25% of the 2nd year immediately followed by the year in which application for loan has given. You can also avail a second loan in the sixth year, provided the first loan has been paid in full.