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Benefits of PPF (Public Provident Fund)

Public provident fund is the popular investment scheme in India due to its multiple investor-friendly features and associated benefits. The benefits which you will get by joining the Public Provident Fund (PPF) are listed below:

1. Tax Benefits: Tax benefits can be claimed under Section 80C of the Income Tax act and the maturity amount and the interest earned on it is also tax-free. Section 80C allows individuals and HUFs to claim a tax deduction of up to Rs. 1,50,000 from their gross total income.

2. Risk-Free Returns: As it is backed by the Government of India, it provides complete capital protection and risk-free returns.

3. Better interest rate: The central government amends the interest rate on the PPF account every quarter. The interest rate on PPF has always been 7% to 8%. This interest rate is not fixed, it can be increased or decreased depending on the economic condition. Currently, the applicable PPF interest rate payable is 7.1% per annum and it's compounded annually. This interest is tax-free under the Income Tax Act. Compared to the Fixed Deposits (FD) of many Banks, Public Provident Fund (PPF) pays higher interest to its subscribers.

4. No Yearly Maintenance Cost: The beneficiary has to deposit a mere amount of Rs. 500 just to keep the account running.

5. Elongation of tenure: The scheme envisages 15 years for subscribers, following which the amount under tax rebate can be withdrawn by the subscribers. But subscribers can also apply to go further 5 years. And they can choose whether they want to continue contributing in it or not.

6. Feasibility in depositing the money: The money can be deposited into the account through cash, demand draft, cheque or through online transfer, as suited by the subscriber.

7. Loan Facility: Subscribers can avail loan at a reasonable interest rate on PPF account. Opening a loan benefit can avail the loan within the third and sixth year. This is especially beneficial for those who wish to apply for short - term loans.

8. Long-Term Investment Plan: The lock-in period is of 15 years, so It provides a good rate of interest on the amount and turns fruitful as a long-term investment.

 

 

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