PPF Account Benefits - Know PPF Tax Benefits Online

The Public Provident Fund or PPF is one of the most popular savings-cum-investment products in India. They are ideal for risk-averse investors who are also seeking long-term capital appreciation. In addition, PPF’s tax benefits on both, investment and returns make it a compelling choice.

Here are five PPF account benefits you need to know about:

Risk-free, guaranteed returns: The Public Provident Fund is backed by the Government of India. So, one of the most significant PPF account benefits is that it is entirely risk-free. The returns, too, are guaranteed by the government. What’s more is that the funds in your account cannot be attached by even a court order to pay off debtors.

Multiple PPF tax benefits: The great thing about a PPF is its exempt-exempt-exempt (EEE) tax status, one of the only investments in India to enjoy such an advantage. The amount you invest up to Rs. 1,50,000 is deductible from your taxable income, the interest you earn is non-taxable and the maturity amount you get after 15 years is also tax exempt. This makes it one of the most tax efficient investments.

Small savings, good returns: The PPF allows you a lot of flexibility in the investment amount. You can open an account with as little as Rs. 100. Every year, you can invest a minimum of Rs. 500 and a maximum of Rs. 1,50,000. You can make these investments in a maximum of 12 instalments or as a lump sum. Currently (as of June 30, 2018), the PPF offers an interest rate of Rs. 7.6%, compounded annually.

Hat tip: Always make your investment before the 5th of every month to maximise your returns. You can earn the highest return if you invest the entire Rs. 1,50,000 at the start of the financial year (before April 5 every year).

Liquidity with partial withdrawal and loan facilities: Although the PPF has a 15-year lock-in period, you have many options to make use of the funds in your account. You can take a loan (up to 25% of the balance available at the end of two years preceding the year in which you apply for the loan) between the third year and the sixth year. You must repay the loan in 36 months, the rate of interest of which is 2% higher than the interest you earn.

From the seventh year, you can make partial withdrawals from your account. Besides, partial withdrawals, you can prematurely close your PPF account if you need the funds for severe medical treatment or for higher education.

The flexibility of tenure: When your PPF account matures after 15 years, you have two options – withdraw the entire amount or extend the tenure in blocks of five years.

Convinced about PPF account benefits, already? Read more here about how to open a PPF account with HDFC Bank.

Don’t forget to read up on these rules of the PPF Account.

To open your HDFC Bank Public Provident Fund, click here to start.

* The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action.c