India Post, the postal network of the country, offers several savings schemes to mobilize small investments. One such savings scheme offered by India Post is the Public Provident Fund (PPF) account. PPF offers an investment avenue with decent returns coupled with income tax benefits. For the quarter ending December, PPF accounts fetch an interest rate of 8 per cent per annum. Interests on deposits are compounded on an annual basis, which means that it is added to the principal amount every year, noted India Post on it's official website- indiapost.gov.in.
Here are 10 things to know about Public Provident Fund (PPF) accounts:
1. PPF comes under the exempt, exempt, exempt (EEE) category of tax status. This means that returns, maturity amount and interest income are exempt from income tax. Deposits qualify for deduction from income under Section 80C of Income Tax Act.
2. PPF accounts can be opened by cash/cheque and in case of cheque, the date of realization of cheque in government account is the date of opening of account, said India Post.
3. PPF accounts can be opened by an individual with Rs 100 but he/she must deposit a minimum of Rs 500 in a financial year and maximum of Rs 1,50,000. The subscriber should not deposit more than Rs 1,50,000 per annum as the excess amount neither earns any interest nor is eligible for rebate under Income Tax Act, mentioned India Post.
4. The amount can be deposited in lump sum or in a maximum of 12 installments per year.
5. PPF accounts mature in 15 years. Thereafter, on application by the subscriber, it can be extended for one or more blocks of five years each.
7. In PPF accounts, premature closure is not allowed before 15 years.
8. A nomination facility is available at the time of opening and also after opening of the account. The account can be transferred from one post office to another.
9. A subscriber can open another account in the name of a minor subject to the maximum investment limit by adding balance in all accounts.
10. Withdrawal from PPF accounts is permissible every year from seventh financial year onwards.