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Ppf Accounts And Its Benefits

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By Author: Neha Sharma
Total Articles: 170
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A Public Provident Fund or PPF is a safe long-term investment option that is government backed and provides tax deductions. These accounts can be opened by various banks as well as post offices. The best thing about it is there is tax exemption for the investment amount, the interest as well as the investment amount. All Indian residents can easily open these accounts which can help in building a big corpus even for retirement purposes.

Here are a few benefits of a PPF:

➢ Flexibility of its tenure: The maturity of an account is 15 years in general which can be either terminated and the amount withdrawn, or you can extend it in a block of 5 years or as structured by the bank.

➢ Liquidity: Partial withdrawals can be made from a PPF account after a stipulated timed as stated by the bank. Although there is a lock-in time, you can withdraw or even prematurely close the account for urgent requirements such as medical expenses or expenses for higher education.

➢ Loan facilities: Loans can be taken after a few years from this account. The percentage of loans that can be taken from the account amount ...
... can be stipulated depending on the lending authorities. Generally, 25% of the balance amount after 2 years can be taken that is of a little high interest and must be repaid within a stipulated time of lesser time than other loans.

➢ Good returns: A PPF account offers good rate of interests which is usually higher than other deposits and accounts provided by banks. These funds cannot be even attached by court order to pay off debtors.

➢ Risk-free: Backed by government, being risk-free is one of the most important factors of this account. The account is entirely risk-free, and the returns guaranteed.

➢ Tax benefits: One of the very few investment options in India to enjoy a complete tax-free status, the total amount invested up to 1.5 lakhs is deducted from your taxable amount. The maturity amount and the interest earned is also free from tax.

➢ Smallest of amounts allowed: With a lot of flexibility allowed in a PPF account, you can invest as little as Rupees 100. You only need to invest a minimum of Rupees 500 in a year in 12 installments in a year or in lump sum to keep the account active.

It is advisable to invest amounts at the start of the financial year to gain maximum benefits.

Author bio:

Neha Sharma is a finance student who loves to write in her free time. Having done considerable research on financial services, she has explained the advantages of a PPF account.

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