Public Provident Fund: The new financial year 2024-25 has started. It would be better if you start financial planning from now, so that you can take maximum advantage of the tax exemption and your financial position becomes stronger by next March. If you want to create a big fund easily, then the Public Provident Fund (PPF) scheme can make your work easier.
Currently, 7.1% annual interest is being given under this scheme. In this you also get the benefit of tax exemption. By investing in this you can create a fund of more than Rs 1 crore. With this scheme, we are also telling you how much fund you can generate by investing every month.
Account can be opened for Rs 500
The minimum amount required to open a PPF account is Rs 500. A minimum deposit of Rs 500 is required in a financial year, while the maximum investment limit has been fixed at Rs 1.5 lakh annually.
Maturity period lasts for 15 years
PPF account matures in 15 years. If you want, you can withdraw the entire money after maturity. However, if you do not need the money then it can be extended for 5 years each. For this, it will have to be extended one year before the completion of maturity.
These 3 options are available on maturity
- The maturity period of PPF account is 15 years.
- After maturity, you can expand your account with fresh deposit
- After maturity, you can extend your PPF account even without any fresh deposit.
Lock in period remains for 5 years
However, money cannot be withdrawn from this account for 5 years after the year of opening the PPF account. After completion of this period, money can be withdrawn by filling Form 2. However, if you withdraw money before 15 years, 1% will be deducted from your fund.
Benefit of tax exemption is available on PPF
- PPF comes under the category of EEE. That means you get the benefit of tax exemption on the entire investment made in the scheme.
- Apart from this, there is no tax to be paid on the interest received from investment and the entire amount received on maturity.
- In this, under Section 80C of the Income Tax Act, tax exemption can be availed on investments up to Rs 1.5 lakh annually.
By investing Rs 12,500 every month, you will get Rs 1.02 crore.
If you want to create a fund of Rs 1 crore through this scheme, then you will have to invest Rs 12,500 every month for 25 years. Whereas if you invest Rs 10 thousand per month, you will get approximately Rs 81.76 lakh after 25 years.
Who can open PPF account?
Any person can open this account in his/her name in any post office or bank. Apart from this, the account can also be opened by any other person on behalf of the minor.
