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PPF

PPF

PPF stands for Public Provident Fund, which is a long-term savings scheme backed by the Government of India. It is a popular investment option for individuals looking for stable returns and tax benefits. 


Here are some key points about PPF & PPF rules:

1.   Eligibility: Any Indian resident, including minors, can open a PPF account. Non-resident Indians (NRIs) are not eligible to open a new PPF account, but if someone opens a PPF account while being an Indian resident and then becomes an NRI, they can continue to hold the account until maturity.

2.   Account Opening: You can open a PPF account at designated banks, post offices, and some authorized branches. You need to fill out the application form, provide the required documents (such as identity proof, address proof, and photographs), and deposit the minimum initial amount (currently Rs. 500).

3.   Contribution Limits: The minimum and maximum yearly contribution limits for a PPF account are subject to change and are determined by the Government of India. As of September 2021, the minimum annual deposit is Rs. 500, and the maximum is Rs. 1.5 lakh. The contribution can be made in lump-sum or in a maximum of 12 installments per year.

4.   Tenure: The initial tenure of a PPF account is 15 years. However, you have the option to extend it in blocks of 5 years after maturity. You can continue to make contributions during the extended period.

5.   Interest Rate: The interest rate on PPF is set by the government on a quarterly basis. Historically, it has been higher than the average bank fixed deposit rates. The interest is compounded annually and is tax-free.

6.   Tax Benefits: Contributions made to a PPF account are eligible for tax deductions under Section 80C of the Income Tax Act, up to the prescribed limit. The interest earned and the maturity amount are tax-free.

7.   Withdrawals: Partial withdrawals from a PPF account are allowed from the 7th year onwards. The maximum withdrawal amount is limited to 50% of the balance at the end of the 4th preceding year or the year before the withdrawal, whichever is lower. Complete withdrawal is permitted at the end of the 15-year tenure.

8.   Loan Facility: After the 3rd year of opening a PPF account and before the 6th year, you can avail of a loan against your PPF balance. The interest charged on the loan is relatively low.

9.   Nomination: You can nominate one or more individuals to receive the proceeds of your PPF account in case of your demise.

It's important to note that the information provided here is based on the PPF rules as of my knowledge cutoff in September 2021. It's advisable to check for any updates or changes in the PPF rules or consult with a financial advisor or the relevant authorities for the most accurate and up-to-date information.