Everybody dreams of growing up and living the life that they’ve always dreamed of. Dreaming of being rich is a pretty common phenomenon, because, to be quite honest, who doesn’t enjoy financial security?
So how does Public Provident Fund come into the scenario? Let us first understand what it means.
The Public Provident Fund is a saving as well as tax-saving implement in India, initiated by the National Savings Institute of the Ministry of Finance in the year 1968.
The main objective of the design is to assemble small savings by suggesting an investment with realistic returns united with income tax benefits. The proposal is completely guaranteed by the Central Government.
So what are the benefits of the said scheme?
- Everyone is eligible: The opening of such an account can be done by any Indian resident over the age of 18 years. This is irrespective of income class.
- Straightforward procedure: Anyone with the intention of opening the said account can walk into a bank or post office, with a minimum balance of 500 INR, and identity proof and get it done.
- Lock in period: This period is 15 years and is affixed to any PPF account. This gives you an assurance that your money can increase without any obstruction and interference. Most other accounts enable you to use your investments, making it difficult for the amount to increase. Such is not the case in PPF accounts.
- Tax-free: EEE (Exempt Exempt Exempt) status is usually applied to PPF accounts. This means that the complete amount out of the PPF accounts is free from income tax.
- Risk-free: Because this scheme is backed by the Central Government, you can be completely assured about the safety of your money.
- Excused from debt, wealth tax and liability: If due to unfortunate circumstances, you are convicted in the court because of debt, your PPF funds will remain untouched.
- Children and minors are eligible too: If new or young parents wish to secure a future for their child, this scheme is a step in the right direction. The account can be opened in the child’s name and whatever amount can be invested in it. Another added bonus, you can declare an exemption from tax from this account as well as your own PPF account.
- Easy to operate: A minimum of 500 INR and a maximum of 1.5 lakh INR can be deposited in this type of account. And furthermore, any amount falling in the category can be deposited at any time within the fiscal year. The only rule to follow is that it is permissible to deposit a highest of 12 times in said fiscal year.
In hindsight, a Public Provident Funds account is like your mini-bank. You can deposit how much ever you wish to deposit as well as take a mortgage adjacent to your investment and pay it off whenever you can.
So now that you know about PPF, managing your finances in a responsible manner just got easier!