Top 10 PPF Account Benefits-You must KNOW

PPF Account Benefits

Public Provident Fund, PPF account benefits are multiple. PPF offers all benefits in one scheme, whether it’s safety, tax benefits, tax-free maturity, PPF extension, or small chunk investment.

What is PPF Scheme?

Public Provident Fund is a 15 year Central Govt. Of India Saving scheme. One has to compulsorily deposit minimum amount of Rs 500 to continue the account for 15 long years. The account matures after 15 financial Years, however one can take loan and partial withdrawal during this period. The maximum investment amount each year is 1.5 lac.

PPF Account Benefits

  • Safe & Secure Scheme -This Safe & Secure scheme is backed by the Central Govt. Of India. Thus there is surety of safety and return from 15 year PPF scheme.
  • Low investment amount – One can start with as low as Rs 500 a year. Therefore people with low income can also invest in the scheme.
  • Loan Against PPF Balance – One can take loan from 3rd Financial Year from PPF.
  • Partial withdrawal – Although PPF is a 15 year scheme and therefore one cannot close the scheme before 15 years. But during this period one can withdraw money partially from PPF account from 7th Financial Year.
  • Risk Free Interest Rate – PPF offers risk free rate of 7.1% (compound interest)
  • Can be extended for any number of times – Although PPF is a 15 year scheme but one can extend it for a block of 5 years for any number of times. Because of this features PPF can be a good retirement scheme.
  • Tax Benefit U/S 80C – The amount deposited up to 1.5 lac is eligible for a tax deduction under Section 80C.
  • Tax Free Maturity -The interest is also exempt (not taxable) from tax. Maturity is also tax free in nature.
  • PPF Can be used as Pension Tool – Tax free maturity, Safe and secure return, Compound interest rate and Any number of extensions make it a lucrative option to be used as pension.
  • Can be Opened in minor Name – One can also use PPF for minor’s education needs or other needs too.

How Much I get after 15 year in PPF?

If one Deposit 1.5 lac for 15 years at the interest rate of 7.1% than the maturity amount will be Rs.40,68,210.

How can I get Maximum PPF Benefits?

One can get maximum PPF benefit by depositing money before 5th of every month and thus the person will earn interest for entire month otherwise interest will be calculated on the lowest balance for the month.

How can I get 1 Crore from PPF?

If you invest 1.5 lac annually for 25 years than you can accumulate 1.03 crore from PPF investment.

Disadvantages of PPF Account

Although PPF is very good investment option but every coin has two face on it. Similarly PPF has some disadvantages like:

  • Low/Negative real rate of return – The current PPF interest rate is 7.1% per annum. If we compare the return with inflation ( rate of goods price increase) than we get low or negative return from our investment.
  • Long Investment Duration– One has to invest compulsorily for long 15 years and continue the scheme. Otherwise one has to pay penalty along with minimum yearly contribution.
  • Premature Closure– One cannot close the account prematurely except in case of death, medical treatment of life threatening disease to you or family, higher education of you or child and if your residency status changes.
  • Maximum Investment amount- The maximum investment is only 1.5 lac per annum, which is quiet low as compared to other investments.
  • Low Liquidity– PPF provide low liquidity. withdrawals are subject to some rules.

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