Saturday, May 31, 2014

Benefits of Public Provident Fund (PPF) Account

Well well, those who visit this blog regularly would be wondering since when Genie got into all this investment fundamentals and all that jazz. Well, I was kinda made to but damn it felt good at the end. The scene is that I am currently posted in a battalion as Assistant Commandant somewhere near Nainital in Uttarakhand and as an officer the most important thing for you would be the welfare of the Jawaans.

As most of us are aware that the Government has ended the Pension Scheme even in the paramilitary forces and that has been replaced by the New Pension Scheme (NPS) since the year 2004. Although this works as a makeshift arrangement for the jawaans and other employees but the leadership felt that they need to be made aware of other long term saving instruments like the PPF scheme. As it turned out, none of the jawaans had a PPF account. They were even not aware what it was. Ergo, I was given the task to motivate and educate them about the PPF scheme. And hence researched a bit into it as what I already knew were the basics and something more was required to encourage them. I came up with all these points after talking to bank people and little research over the internet.

It was a good session. They seemed interested and inquisitive. They had a lot of questions and fortunately I had all the answers. It felt good at the end.  And then i thought I might as well share it on my blog. And hence....

1.  This scheme has a lock-in period of 15 years. Now this may seem risky but think about it for a while. In savings account, do we really ever save anything. The ability to withdraw anytime you want never really lets us save anything there. So this compulsion works for us eventually. Moreover after this 15 year period, one can extend in every 5 years as per convenience.

2. The interest rate is quite high and normally is the highest among other saving tools and intruments.

3. The interest you get is not taxable and the amount you get upon maturity is also not taxable.

4. This sum is also exempted from wealth tax.

5. The maximum annual submission can be of 1,00,000 INR and minimum can be as low as 500 INR. Plus, whatever sum you want to deposit in an year can be made in as many as 12 installments.

6.  The entire amount can be used for tax exemption under section 80C.

7.  You can open this account in SBI, post offices or in any other nationalized bank. You need not have a SBI savings account to have a PPF account.

8. You can open this account by a initial deposit of 100 INR only.

9.  Most people do not know that if you submit your deposit between the 1st and 5th day of the month, the interest you will get would be the maximum!

10. Premature closure is only in case of death.

11. Most of us need loans to make homes or educate children. Here you can get loans against your PPF deposit.

12. If because of some reason, you did not deposit anything in an year, the account can be reactivated later after paying a fees of just 50 INR.

Hope this helps some confused souls!

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