Savings And Investment Scheme Guide For Indian Poor And Middle Class:Public Provident Fund

What Scheme Mean?
The Public Provident Fund(PPF) is a long term savings instrument established by the central government,which offer tax concessions on savings as well as withdrawal after lock-in period.

Eligibility
As to be resident of India.

Entry Age
No age limit.

Investment
Minimum:Rs500 per annum
Maximum:Rs1lakh per annum
A maximum of 12 deposits allowed in a financial year.

Interest
8.6% compounded annually
The Interest for the month is calculated on the minimum balance available in the account from 5th of a month to the last date of the month.

Account Holding Type
Individual,Minor

Tenure

• 15 years
• On completion of 15 years,the account can be extended by 5 years.
• The PPF accounts matures after 15 years but the contribution has to be made for 16 year in all.The 15 year period is calculated from the financial year following the date on which the account is opened,effectively the PPF account matures on the first day of the 17th year.

Tax Benefits
The sum invested in PHF account is eligible for tax deduction under section 80C subject to a maximum savings of Rs1Lakh in a Financial year.On Maturity,the entire amount including the interest is tax free.The deposit is also exempt from wealth tax.

How to Join The Scheme/Account/Deposit/Policy?
Once you have selected the location to open an account you will need the following documents:

• An account opening form.
• Two passport size photographs.
• Address and identify proof such as copy of the passport,PAN card,License card or ration card.
• Carry original identity proof for verification at the time of opening account.
• Choose a nominee and get a witness signature to complete the formalities to start the deposit.

Objective And Risk
The primary Objective of saving in the PPF account is to avail tax deduction on deposit,guaranteed returns on Investment and tax free withdrawal on Maturity.

Tips
Investing 1 Lakh per Year into PPF will accumulate Rs 34.64 lakh at end of the 15-year PPF Tenure of which the investment contribution is only Rs15 lakh,the rest is the advantage of compounding Interest