Things about Public Provident Funds (PPFs) That you Must Know

Earlier, people used to shy away from investing in Public Provident Funds (PPFs) because of long maturity period (15 years) and the absence of any kind of premature closure option. However, the government has now allowed the subscribers to exercise that option contingent on them holding their PPF for a minimum of five years.

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There are many advantages of the PPF scheme. However, you can make the most of it if you are well-informed. On that note- the following are some of the most important things to know about PPF:

1. PPF Duration

It’s widely believed that the maturity period for a PPF is 15 years. However, the actual maturity period turns out to be 16 years. This is because apart from the 15 fixed years, you also have to include the year in which you opened the account.

2. Deposit Value

It’s mandatory to deposit at least Rs. 500 every year in your PPF account. The maximum limit is Rs. 1.5 lakh for each year. However, to open a PPF account you need only Rs. 100.

3. Tax Benefits

Not only PPF is a safe and attractive investment option, it also offers tax benefits as well. Under the Section 80C of the Income Tax Act, you can claim tax benefits up to Rs. 1.5 lakh for a fiscal year. Moreover, when your investment matures, the money you receive (the principal amount and the interest) is not taxed.

4. Premature Withdrawal

As mentioned earlier, you can withdraw your PPF funds prematurely. However, you have to be in for at least 7 years minimum. Moreover, the withdrawal amount must not be more than 50% of your account balance at the end of the fourth or 50% of the balance at the end of the immediate preceding year (whichever is lower).

5. PPF Loans

You can take a personal loan against your PPF account balance. However, that’s allowed only during the 3rd and 6th year of your account opening. Also, the loan amount is limited to 25% of the balance at the end of the second fiscal year preceding the year in which the loan is applied for.