Tuesday, 4 June 2019

Do you know about these PPF facts

Public Provident Fund (PPF) is considered as one of the most popular long-term investment instrument in the country. This account comes with a maturity period of 15 years and offers exempt-exempt-exempt (EEE) income tax benefits. It also offers guaranteed
returns on the deposits. For April to June quarter, the government has kept the interest rates unchanged at 8 per cent. However, the interest rates on PPF are revised every quarter.   

It may be noted that under certain circumstances, subscribers can withdraw the partial amount before the completion of maturity. One can even take a loan against the amount available in the PPF account as well. Here are five such facts that you must know-

1. No court in India can attach PPF balance- The PPF balance is protected under section 14A of the Government Savings Act, 1873. The annual contribution in this account can range from Rs 500 to Rs 1.5 lakh. All the residents of India from the organised and unorganised sectors qualify to make contributions under this. Therefore, it enjoys legal protection against attachment from any court of India.

2. PPF for minors- Subscribers can open an account for their minor children. If you open this account in their early age then by the time your child becomes adult, the account would have matured. After 15 years of the lock-in period, you can this amount for their education. This account can be opened either by father or mother. However, both the parents can not open this account for the same minor. 

3. Loan against PPF- Subscribers can take a loan against PPF account from the third financial year till the end of the sixth financial year. One can not use the entire balance in the PPF to avail of the loan. It may be noted that the loan taken has to be returned within 36 months. Another important thing is that the subscriber can not make the repayment of interest in more than two monthly installments.

4. Partial withdrawal from PPF account- Subscribers can withdraw partial sum from their PPF account only after the completion of five years. It is important to note that a maximum of 50 per cent of the total balance underlying in the PPF account can be withdrawn after five years. The partial withdrawal from the PPF account is tax-free.

5. Deposit money in PPF account online- Subscriber can deposit money in their PPF account in three different methods through online mode. These are namely- NEFT (National Elecronic Funds Transfer), ECS (Electronic Clearing System) mandate and Standing instructions. In NEFT, it takes a few minutes or hour to get your money transferred into your PPF account. In the ECS mandate facility, money automatically debits from your bank account and gets credit in the PPF account. Whereas, in standing transfer instruction, subscriber can give a standing instruction to the bank to debit and transfer money from your bank account to your PPF account within the same bank.

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