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Learn About Public Provident Fund (PPF): Basics and Benefits

Public Provident Fund, commonly known as PPF, is a popular long-term investment scheme offered by the Government of India. It’s known for its safety, tax benefits, and attractive interest rates, making it a preferred choice for many savers and investors.

What is PPF?

PPF is a savings-cum-investment scheme that allows individuals to invest regularly and build a corpus over time. It offers a fixed rate of interest compounded annually, along with tax benefits on contributions, interest earned, and maturity proceeds.

Key Features of PPF

  1. Tenure: PPF has a maturity period of 15 years, which can be extended in blocks of 5 years.
  2. Investment Limit: Investors can deposit a minimum of ₹500 and a maximum of ₹1.5 lakh per financial year.
  3. Interest Rate: The interest rate on PPF is set by the government and is typically higher than bank savings rates.
  4. Tax Benefits: Contributions to PPF qualify for tax deductions under Section 80C of the Income Tax Act.
  5. Withdrawals and Loans: Partial withdrawals are allowed after the 7th year, and loans can be availed against PPF balances.

Why Invest in PPF?

  1. Safety: PPF is backed by the government, making it a safe and secure investment option.
  2. Tax Benefits: Enjoy tax deductions on contributions and tax-free interest earnings.
  3. Long-Term Wealth Creation: PPF encourages disciplined savings and helps in long-term wealth creation.
  4. Retirement Planning: It serves as an excellent tool for retirement planning, providing a steady income stream post-retirement.
  5. Flexibility: Investors have the flexibility to extend the maturity period or make partial withdrawals for financial needs.

Opening a PPF Account

  1. Visit Bank/Post Office: PPF accounts can be opened at designated banks or post offices.
  2. Fill Application Form: Submit the required documents and fill the PPF account opening form.
  3. Deposit Initial Amount: Deposit the initial amount to activate the PPF account.
  4. Manage Account: Keep track of contributions, interest earned, and maturity details through periodic statements.

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