Savings schemes operated by the Post Office have always been the first choice for investors who want security for their money along with stable returns. Among these schemes, the Public Provident Fund (PPF) stands out. This scheme is specifically designed for salaried individuals, the middle class, and investors in higher tax brackets who want to make safe, long-term investments.
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Government Offers 7.1% Tax-Free Interest on PPF
Currently, the PPF account offers an annual interest rate of 7.1 percent, which is completely tax-free. This scheme falls under the EEE category, meaning the invested amount is tax-exempt, the interest earned is tax-free, and the maturity amount is also tax-free. Investments made under this scheme are also eligible for tax deductions under Section 80C of the Income Tax Act.
PPF Lock-in Period and Investment Limit
The total lock-in period for the PPF scheme is 15 years. Investments can be started with as little as Rs. 500. The minimum investment in a financial year is Rs. 500, and the maximum is Rs. 1.5 lakh. After maturity, the investor can extend the account in blocks of five years, thus continuing to benefit from the interest for a longer period.
How to Accumulate Over Rs. 40 Lakhs
If an investor deposits the maximum limit of Rs. 1.5 lakh in their PPF account every financial year, they will need to save approximately Rs. 12,500 per month. In this way, the total investment amount over 15 years becomes Rs. 22.5 lakh. According to the current interest rate of 7.1 percent, this will yield interest of over Rs. 18 lakh. Thus, the total amount at maturity reaches approximately Rs. 40.68 lakh.
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Loan and Withdrawal Facilities Also Available
A PPF account can be opened at a Post Office or any authorised bank branch. Loan facilities are also available on this account after a few years of opening it. In addition, partial withdrawals are permitted after five years, allowing investors to access their funds if needed.