PPF account is considered to be a better option in terms of guaranteed and safe investment. Apart from this, PPF account also gets the benefit of tax exemption under EEE category. PPF account cannot be attached even for loan repayment.
Everyone wants to keep their future financially secure along with managing their current expenses. Financial planners also suggest various investment options for life after retirement. But he also says that any person should keep many things in mind for retirement planning. For example, what will be the benefits of investing in which fund, where is the risk more. Apart from this, they should also be aware of the rules related to interest and tax exemption on it.
Public Provident Fund (PPF) is also one of these investment options. Investing in PPF is done in a big way. There are many reasons behind this. The first reason is the tax exemption available on PPF investment. Regarding tax, PPF comes under EEE category. PPF account can be opened in any bank or post office so that a large amount can be created for the future without any risk. Today we are going to tell you many special things related to PPF account including tax and interest.
Benefits of tax exemption on PPF
Under Section 80C of the Income Tax Act on Public Provident Fund Account, tax exemption is available on investments up to Rs 1.5 lakh per annum. If interest is earned on the amount deposited in PPF, then that also comes under the purview of tax exemption. The benefit of tax exemption is also available on the amount received at the time of maturity. Withdrawal is also completely tax-free. In this way, you get tax exemption under EEE category for investing in PPF.
PPF account maturity
The maturity period of PPF account is 15 years. After the maturity period, investors have three options. The first is that they withdraw their entire amount and close the account. The second option is that if they want to invest in it even further, then they can extend this account for a period of 5-5 years. Also, investors also have the option that even after the completion of 15 years, they can continue this account without any contribution.
What if you want to close the account?
Keep in mind that except in certain circumstances, the PPF account cannot be closed before maturity. If you want to close the account, then you have to fill an application form by visiting the bank branch or post office. In this application, you will also have to provide the details of the bank account where you want to transfer the maturity amount. For this, along with the canceled check, a copy of your address and identity card will also have to be given.
The post office will check whether the lock-in period of your PPF account has been completed or not. If yes, then the post maturity process will be initiated and the total amount will be transferred to your bank account.
What to do if you want to invest more for 5 years?
If you want to continue your PPF account after a period of 15 years, then you can extend it for 5 years. For this, you have to apply in writing to the bank branch or post office (wherever the account is open) within one year of maturity. As long as you continue to contribute to this account, you will not have to pay tax on the contribution amount. Even after this 5 year period, you can extend it for another 5 years. Interest will continue to accrue on it till the account is closed.
keep these two things in mind
- The PPF account cannot be attached even to pay off the loan. The court also cannot order a person to attach the PPF account to pay off the loan.
- A part of the total amount can be withdrawn from the 7th year onwards in the first 15 years of maturity. However, for this some conditions have to be fulfilled. You can find out about this from the bank or post office.
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