At the beginning of the new year, there are few people who do not make a vow in their mind at least once for changes and improvements. Many calculations may have been made in financial matters as well. If that doesn’t happen, it’s time to dump her and move on. The relevance of investments is also increasing in an era of increasing economic instability and costs. Here’s a small savings plan that has no such risks, is extremely safe and offers better returns than other fixed income schemes.
Public Provident Fund
The Public Provident Fund (PPF) was introduced by the Central Government to promote the practice of saving among the common man and to ensure retirement security for those working in the private sector. The project was started in 1968. It is one of the longest term investment projects in India. The term of the PPF account is 15 years. After the completion of the first term, the investment can be maintained for any number of times over a period of 5 years.
PPFs are attracted by high returns, tax benefits and security. PPFs also offer the highest interest rates on small savings schemes. At present, the interest rate is 7.1 per cent. The interest rate is set by the Central Government for each financial quarter. Anyone residing in India can open a PPF account. Expatriates cannot open a PPF account. But the account started before going abroad can be maintained.
PPF deposits up to Rs 1.5 lakh per annum are eligible for tax benefits under Section 80-C of the Income Tax Act. Interest earned on PPF account and maturity amount are exempt from income tax. Under no circumstances can the court order the withdrawal of the balance amount in the PPF account under the Savings Bank Act. But the government can seize the PPF amount if it wants to collect the tax arrears.
The minimum amount that can be invested per year is Rs.500. The maximum investment is Rs 1,50,000. The investment can be made in a single installment or in 12 installments per annum. Funds should be withdrawn in full only after maturity. Partial withdrawal is allowed every year after the completion of 7 years. Also, you can take a loan if you need to, depending on the investment at a low interest rate. The steps for opening a PPF account are very simple. You can also open an account online. Or you can open an account at a bank or post office.
How about 12 lakhs?
If you deposit Rs 1,000 per month in a PPF account for 15 years, the deposit will be Rs 1.80 lakh at maturity. The interest received on this was Rs 1.45 lakh. That is, at the end of the 15-year period, he will get back Rs 3.25 lakh. However, if he continues to invest Rs. Of this, Rs 3.60 lakh is deposited and Rs 8.76 lakh is added as interest plus return.