Public Provident Fund (PPF) is a government-backed savings initiative recognized for its assured returns and tax advantages. To broaden access to this scheme, every post office across the nation offers the option to open a PPF account. A PPF account established at a post office functions similarly to one opened at a bank. Below, we outline the process for opening a Post Office PPF Account and highlight the key features of this savings program.
What is Post Office Public Provident Fund?
The Post Office Public Provident Fund (PPF) is a long-term savings program provided by the Government of India through its post offices. This investment avenue offers competitive interest rates along with tax benefits. The PPF has a mandatory lock-in period of 15 years, during which both the principal amount and the interest earned are exempt from tax. This makes it an appealing choice for individuals seeking to reduce their tax liabilities.
Features of Post Office PPF Account
Minimum and maximum investment: An individual can invest a minimum of Rs 500 and a maximum of Rs 1.5 lakh annually in a PPF account.
Tax benefits: Investments up to Rs 1.5 lakh per year in this scheme qualify for tax deductions under Section 80C of the Income Tax Act. Additionally, the interest earned and the maturity amount are also tax-exempt.
Partial withdrawal: Investors are permitted to make partial withdrawals starting from the seventh year of their investment.
Loan facility: Holders of a Post Office PPF account can avail themselves of a loan between the third and sixth year after account opening. The loan amount can be up to 25% of the total balance as of the end of the first year of the loan application.
PPF interest rate: The interest rate for PPF is set by the government and is subject to change every quarter. Currently, the interest rate stands at 7.1 percent.
How to open a post office PPF account?
1. Visit your nearest post office or download the PPF application form online.
2. Complete the form and submit the required KYC documents, along with a passport-sized photograph.
3. You can start an account with at least Rs 500. Keep in mind that you can deposit up to Rs 1.5 lakh in the account each year.
Upon submission, you will receive a PPF passbook as well.
Who is eligible to open a post office PPF account?
Any individual residing in India is eligible to open a PPF account.
An individual is permitted to have only a single PPF account.
– Opening a joint account is not permitted.
An account may be established under the name of a minor.
An individual residing outside India is unable to create a new account.
NRIs can maintain the current PPF account until it matures.
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