If you are looking for a low-risk investment option, a Public Provident Fund or PPF is the answer for you. It is a long-term investment tool that helps you save money as well as enjoy tax benefits. The returns on a PPF investment are high, too, making it one of the most popular investment products of India. PPF account and its benefits are endless but here are seven top benefits you should know about:
- Low risk: One of the biggest Public Provident Fund benefits is that it is a safe investment product. Since PPF account is not linked to any markets and is backed by the Government of India, an important PPF account benefit is that it has little to no risk. The returns on your investment are guaranteed by the government, so you can invest in a PPF and relax. An additional PPF account benefit is that if, unfortunately, you default on your debts, the funds in your PPF account cannot be attached by a court order to pay off the debt.
- Tax benefits: Any investment up to Rs 1.5 lakh in a year into a PPF account is eligible for tax benefits under section 80C of the Income Tax Act. So your investments will be deducted from your taxable income. Another Public Provident Fund tax benefit is that the interest you earn on your investment is completely tax free.
- Nomination benefits: A PPF account can be opened by anybody, including minors. Minors can invest in a PPF account under the guidance of a legal guardian. An important public provident fund benefit is that the account comes with a nomination option. So, you can nominate a beneficiary to your account in the unfortunate case of your death.
- No minimum limit: With a PPF account, there is no minimum limit on deposits. You can start as low as Rs 500 and go on increasing the funds up to Rs 1.50 Lakhs.
- Good returns: While you have the liberty to invest as low as you want, your returns are guaranteed by the Government of India. One of the PPF account benefits is you can also decide if you want to invest monthly or at once. For Quarter Jan-Mar 2020, the interest rate on a PPF account is 7.9% compounded annually.
- Liquidity and loan facilities: A PPF account goes a long way at your time of need. One of the PPF account benefit is that you are eligible to get a loan from the Bank against a PPF account you hold with them from the 3rd F.Y. till end of 6th FY. In case of emergency, you can also make partial withdrawals from your PPF account on completion of five years from the end of the year in which the account was opened.
- Flexible tenure: A PPF benefits after 15 years when the account tenure is over. Upon maturity you can decide to withdraw the entire amount or further invest in the PPF for an additional five years by applying for account extension within one year of maturity.
These are the top benefits of a PPF account. There are more advantages such as a PPF account can be transferred from your bank to a post office or other bank near you. You can also have your PPF account moved to a different Bank of Baroda branch. To invest in a safe and reliable investment tool, click here.