FD is better than PPF because of its more flexible attributes and it is better than RD because it offers higher interest rates. Among RD, FD and PPF the best instrument for investing your money is different for every customer. A PPF has a limit of deposit of Rs. 1.5 lakh per year.
This means that first, the money invested in PPF in a financial year gets exempted from an individual's taxable income (Under Section 80C) for that year. Also, the interest earned on PPF deposits along with the accumulated amount doesn't have any tax liability.
PPF accounts can be started at any time. Given that there is no age limit to open PPF account, all that matters is that contributions are made at regular intervals of time so as to earn healthy returns in the future.
Now, any Indian Citizen, resident or non-resident, between the age of 60- 65 years can also join NPS and continue upto the age of 70 years in NPS. Subscriber joining NPS after the age of 60 years will have an option of normal exit from NPS after completion of 3 years in NPS.
Ankur Choudhary, Co-founder& CIO, Goalwise.com replies: There is no upper age limit for opening a PPF account. The lock-in, however, remains at 15 years irrespective of the age at which you open the account. On maturity, the account can be extended by blocks of 5 years any number of times.
The participating banks that offer a PPF account are given below.
- Bank of India.
- Union Bank of India.
- Oriental Bank of Commerce.
- IDBI Bank.
- Punjab National Bank.
- Central Bank of India.
- Bank of Maharashtra.
- Dena Bank.
PPF is a government-run scheme; thus, the rate of interest is the same in all banks for PPF.
State Bank of India (SBI)
A person can not open more than one PPF account in his / her name, as per PPF regulations. In case you have two PPF accounts the second would be regarded as invalid since it is not authorized under the regulations.
Compared to fixed deposits of banks, where the interest rate is fixed for the period of the investment, the PPF interest rate is floating and will alter every quarter by the government. From the 5th to the last day of each month, interest on PPF is paid on the lowest balance in the account.
PPF provides income tax deduction under section 80C for the amount invested (subject to a limit of Rs 1.5 lakh a year). Interest earned is exempt from tax and there is no tax on the amount received on maturity of the account.
It is always advisable to invest in the PPF at the beginning of the year. Therefore, if you are making staggered investment on a monthly basis in PPF, it is advisable that you do it before the fifth of every month. However, maximum interest can be earned only if you deposit the sum at the beginning of the year.
PPF Calculation Examples for Different Investment Tenures
| Investment Period | Total PPF Investment | Total Interest Earned |
|---|
| 15 years | Rs.1.5 lakh | Rs.1.4 lakh |
| 20 years | Rs. 2 lakh | Rs. 2.88 lakh |
| 30 years | Rs. 3 lakh | Rs. 9 lakh |
You can check your PPF account details including the balance under the 'My Deposits' section. Check PPF balance through missed call or SMS: Give a missed call to 9223766666 or send an SMS 'BAL' to the same number to get the balance.
For NSC, KVP, Time deposits, and Senior Citizens Savings Scheme (SCSS), the rate of interest remains fixed for investors until maturity. The interest rate on PPF remains at 7.1 per cent per annum while for the Senior Citizen Savings Scheme, the interest rate is 7.4 per cent per annum.
Select your PPF account, choose “Financial Year†or any other duration of interest to you, Click on the “Go†button. The generated account statement would have a field “Maturity Dateâ€, which is the exact date your PPF account matures. Also, PPF accounts would mature on 1st day of Financial year (April 1st).
Eligibility: Any Indian citizen can open a PPF account either in his own name or on behalf of a minor. But, you can't open a joint account or one for a Hindu Undivided Family (HUF). Also, an individual can have only one account in his name.
You can extend it indefinitely in blocks of five years. One option for the account holder is to withdraw the entire amount, including interest, and close the account on maturity. But if you want to make the best use of the PPF, it's best to extend it until you retire.
The nominee can withdraw the money if the account holder dies before the maturity of the PPF account. Also, the condition of completing 5 years of the account gets rejected in such a situation. It means the PPF account is closed after the death of the account holder. The money is given to the nominee or legal heir.
Documents Required for PPF AccountSelf-attested photocopy of Signature Proof Document(s) – PAN, Driving License, Voter ID, etc. In case of minor PPF account, KYC documents and a photograph of parent/guardian is required along with age proof document of the minor (Birth Certificate/School Leaving Certificate).
Speaking on the PPF account benefits other than income tax exemption under Section 80C of the Income Tax Act; SEBI registered tax and investment expert Jitendra Solanki said, "PPF is one of the high yielding (current PPF interest rate is 7.1 per cent) risk-free investment instruments, which is backed by the Government
