Investing in PPF a good start for secure future financial planning
In this time of inflation, everyone’s expenses have increased while interest rates of saving accounts have come down drastically in the past few months. In such a situation, the post-retirement financial need has also increased. This is the reason why the trend of saving for the period after retirement has increased. This is because after retirement, people’s income decreases or stops. In such a situation, if you make wise decisions about saving from the very beginning, then after retirement you can live a stress-free life. Public Provident Fund (PPF) is one of the most popular long-term investment options.
Major benefits of investing in PPF:
1. Tax benefits: Investments up to Rs 1.5 lakh per annum in PPF get the benefit of tax exemption under Section 80 (c) of the Income Tax Act. Due to this also the scheme is quite popular.
2. Income from interest not taxable: The person investing in PPF gets the benefit of tax rebate in every way. This investment option falls under the Exempt Exempt Exempt (EEE) scheme. This means that you will not need to pay any tax on the interest received from investing in Public Provident Fund. At the same time, if you look at many other instruments, the return received after paying tax is quite low. However, interest must be reported while filing ITR.
3. High interest rate: Investment in Public Provident Fund currently attracts interest at the rate of 7.1 per cent which is more than twice that offered by most banks for saving accounts. The interest rate is not fixed and is linked to government bold yields and is changed quarterly. If you compare this rate with the FD rate of major commercial banks, you will find that you get better returns by investing in PPF.
4. Great plan for retirement: If you invest Rs 1.50 lakh(maximum amount that can be invested in 1 financial year) every year in PPF from the beginning of your job, then by the time of retirement you will have a good corpus ready. PPF account matures in 15 years but you can extend the maturity period of your account in blocks of five years.
5. Loan, Partial Withdrawal Facility: PPF account holder can meet his required expenses by taking loan from their PPF account within a period of three years to six years after the account is opened. At the same time, after investing for six years, you can make a partial withdrawal from the seventh year without paying any tax.
Who can open PPF account?
Any Indian resident with valid KYC documents can open a PPF account. Parents can also open and operate a PPF account incase of minor child.
