Benifits of PPF

 As the deadline for income tax returns approaches, income taxpayers are busy finding ways to avoid income tax. Under section 80C, income taxpayers will get a discount of up to Rs 1.5 lakh per annum if they invest in certain projects. One such project under Section 80C is the Public Provident Fund (PPF).

PPF was established by the National Savings Institute under the Union Ministry of Finance. The purpose is to provide tax breaks to millions of unorganized workers outside the scope of the Provident Fund. 

The rules of PPF are very straightforward. Any Indian citizen can open a PPF account in his own name or in the name of a minor at selected branches and post offices of a total of 16 banks, including State Bank. However, only one PPF account can be opened in one name. Accounts cannot be opened in the name of Hindu Undivided Family or in the joint name.

According to the rules of 2019, a PPF account can be opened with a minimum of 100 rupees by filling a specific application form with Aadhaar card, PAN card, address proof certificate and passport size photo. Money can be kept in the account as many times as you like in a financial year. However, in total, one and a half lakh rupees cannot be kept in one financial year. You have to keep at least 500 rupees every financial year.

But what is the benefit of keeping money in PPF? 

Firstly, up to Rs 1.5 lakh per annum deposited in the account will be exempted under Section 80C of the Income Tax Act and no tax will be levied on the interest earned.

Secondly, there will be more interest here than fixed deposits in the bank. For the first quarter of the 2021-22 financial year (April to June), the interest rate is 7.1 percent. Note that the interest rate on the National Savings Certificate (NSC) is 6.8 percent and the interest rate on five-year savings at the post office is 6.7 percent.

According to the Government Savings Bank Act, 1973, no court can confiscate money from a PPF account. Loans can also be taken from PPF accounts. As per the rules, loans are available from the third to the sixth year of account opening. This loan has to be repaid within 36 months.

Account in whose name, he can nominate as per his choice. Anyone with a provident fund can open a PPF account.

This savings must be made for 15 years. If anyone wants to extend the term, the period must be extended within one year of its expiration. This extension can be up to five years. This PPF account can be easily transferred from one branch of one bank to another or from one bank to another. In the same way transfer can be made from any post office to bank or from bank to post office. The customer does not have to incur any additional cost to transfer this account.

Within seven years of opening the account, a portion of PPF's savings can be withdrawn. As a result, loans are no longer available. Money can be withdrawn by closing the account five years after opening the account for the treatment of a terminal illness or for higher education needs.