Public Provident Fund Account

A public provident fund (PPF) is a good way of saving for your future. The one feature that lets you grow your money is the lock-in period of 15 years and the power of compounding.

Keep your money invested in a Public Provident Fund and see it grow through the years. You should not just make use of this account for your tax saving requirements but also plan your long term investment and deposit the amount accordingly.

A PPF account can be opened with a Post Office or with your bank. Most of the banks now allow you to open a PPF account online which saves your time from visiting the bank branch personally.

Some salient features of the PPF account are given below in FAQ format:

1. Who can open an account?
Individuals who are residents of India are eligible to open their account under the Public Provident Fund.

2. What is the minimum and maximum deposit one can make?
Minimum is Rs.500 per annum and maximum is Rs.1,50,000 per annum. The amount can be deposited in a lumpsum and only 12 deposits are allowed in a financial year (1st April to 31st March)

3. What tax benefits do I get?
The deposits in a PPF account are allowed as a deduction upto Rs.1,50,000 u/s 80C of the Income Tax Act.

4. What is the benefit of investing in this account?
If you invest say Rs.1,00,000 beginning of every year, at the end of 15 years your maturity amount will be more than Rs.30,00,000. This is due to the power of compounding.

5. Are withdrawals allowed from the account?
Yes, withdrawals are allowed subject to certain conditions. You can withdraw upto 50% of the balance after completion of 5 years.

6. What happens after completion of 15 years?
You can either close the account by claiming the maturity proceeds or can continue to hold the account for another 5 years after approval from the bank or post-office where you are holding the account.

This is one of the best savings schemes as the investment, interest and withdrawal, all are tax-free.