- Being a sovereign-backed instrument, it offers the highest safety.
- The rate of interest is fixed every fiscal and benchmarked against the yield of central government securities of comparable tenures.
- The current annual return is 8.7%.
- The rate of interest is compounded annually.
- Only Indian citizens can open a PPF account, NRIs and foreigners are not permitted to do so.
- If you attain NRI status after the account is opened, you are permitted to continue maintaining it.
- The money in a PPF account is not repatriable.
- Parents can open an account in a minor’s name but the total amount invested in the parent’s and minor’s account should be maximum Rs 1 lakh, which is the limit under Section 80C.
- Account holders are given a passbook to keep track of deposits, interest earned, withdrawals, loans and account balance.
- Each individual is eligible to hold only one PPF account.
- A PPF account can only be opened in an individual’s name and cannot be a joint account.
- A PPF account can be nominated and it is wise to do so. The nomination can even be cancelled or updated by filing a fresh request.
- Investments in PPF offer a deduction under Section 80C of the Income Tax Act.
- The minimum investment under PPF is Rs 500/annum and it can go up to a maximum Rs 1 lakh, which is the limit under Section 80C.
- Investments in PPF need not be made at one go but can be done in installments, up to a maximum 12 in a year.
- The principal amount invested gets a tax deduction under Section 80C. The interest earned is also tax free. On withdrawal, the principal and interest accumulated are exempt from tax.
- Investments in a PPF account cannot be attached under any court order with respect to any debt or liability of the account holder.
- The tenure of a PPF account is 15 years.
- Though the lock-in period is 15 years, investors are permitted premature withdrawals and are even offered the facility of a loan.
- Once the 15-year tenure has been completed, the account holder has three options: extend it by a 5-year block, close the account and withdraw all his money, or leave the account idle. The PPF account will continue to earn the designated rate of interest every year.
To know why the Public Provident Fund is a good investment avenue, click here.