Public Provident Fund in 10 points

1. Public Provident Fund (PPF) is a saving scheme by government of India which gives a guaranteed return on your investment. This can be availed by adults (18+ age) from Post office or any Bank.

2. PPF has a lock-in period of 15 years i.e. the money cannot be withdrawn during this period. One can do a partial withdraw 1 time after every 5 years. (50% of 4th,9th,14th year).

3. The interest rate ranges from ~7-10%, this varies every quarter and is fixed by government. Interest earned is tax-free if one does not quit the scheme.

4. One can start the account with minimum of Rs. 500 and can deposit a maximum of Rs 1.5 lakhs every year. One needs to deposit minimum of Rs. 500 every financial year to avoid discontinuation of your account.

5. One can avail tax deduction benefits on PPF under section 80C.

6. PPF can be extended in blocks of 5 years after the maturity of 15 years. One can withdraw a maximum of 60% on maturity if applied for extension.

7. Pre-mature closure of account is only allowed after 5 years of opening the account with a penalty fee of 1%.

8. One can avail loan on PPF account after completion of 1 year after end of the financial year. The loan can be taken worth 25% of savings in your PPF account 1 year before. For example, If Ram started his PPF in 2015-16, he can take loan in 2017-18 and can get loan worth the amount deposited by end of FY 2015-16.

9. Documents : Address Proof (Aadhar, PAN, passport, driving license), Identity proof (Aadhar, PAN, passport), KYC Form, PPF Form.

10. Opinion : PPF ensures trustworthiness and guaranteed returns. Also, it ensures that you are disciplined investor for 15 years and get a stable interest over the period. At the same time, this can be considered a drawback as the amount will be locked and cannot be withdrawn. If you are a low risk investor and want to avail tax benefits then this is a ideal investment option. If you also want to invest money as a backup plan which might be required after 15-20 years, then this is again a good option to consider. Remember, tax benefits over a long period of time makes a huge difference.

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