PPF Account Benefits

The current rate of interest offered on a PPF account is around 7.1%. However, there is a possibility of a change in the interest rate offered by the government. The government has the authority to lower or raise the rate of interest on PPF accounts. Hence, PPF offers a high rate of interest as compared to FDs, and, hence, it is due to this PPF benefit that people like to invest in this scheme.

Key Features of PPF 

Indians have the habit of saving some part of their income every month for their future. It’s inbuilt in our DNA. Some people like to save monthly in a savings account, while some use different investment schemes that not only save money but also help in growing their wealth. Some investment schemes offer high returns on investment, but they also come with high risk. But there are some schemes, like PPF, that not only offer decent returns but are also low-risk investments. However, before investing in any scheme, one should have a complete understanding of the concept. Before diving into the PPF account benefits, let us look at the features of a PPF account. Here are some key features of opening a PPF account:

• PPF, or a public provident fund investment scheme, is completely safe as it is backed by the government of India.
• PPF has a lock period of 15 years, and after completing 15 years, if the account holder wishes to extend the period, they can extend it by 5 years.
• It is an interesting tax-saving tool because the amount invested, interest earned, and the overall maturity amount are all tax-free.
• You can start investing in a PPF account with a minimum of Rs 500 to Rs 1,50,000 a year. So, you don’t need to have a lump sum amount to have a PPF account. Also, you just need to make one deposit every year to keep your account running.
• After saving for 3 years in a PPF account, you can avail a loan against your invested amount. 
• A PPF account can be opened in the name of an individual or as a guardian in the case of a minor. 
• In the event of the death of the account holder, the full accumulated amount is paid to the nominee, which is a great death benefit.
• Only Indian citizens are allowed to open a PPF account. NRIs or HUFs are not eligible.
• Account holders can deposit either monthly or once in a lump sum amount once a year.

There are a lot of investment schemes that offer promising returns every year. But you need to be a financial wizard to understand these complex schemes. If you feel that understanding these schemes is not your cup of tea, then it is ideal to invest in PPF as there are numerous PPF account benefits.

What are PPF Account Benefits?

Let’s be honest; time is loyal to no one. With markets so volatile in nature, investment decisions should be made with proper research and analysis. Your decisions today should not leave you with any regrets later, as you have invested your hard-earned money, and it’s important for you to keep it safe and secure.

A good financial strategy will help you keep afloat in tough times. The reason people find investing in PPF a reasonable solution to their financial worries, is because of the many PPF benefits it offers. Here are the top 5 PPF account benefits:

1. Low Risk Investment with Guaranteed Returns

This is one of the most significant PPF account benefits. Since the PPF scheme is backed by the Indian government, the risk of losing your money in this scheme is very low. The returns offered on the scheme are also adequate. Also, if you have any debts that you are unable to pay, they cannot be attached to any court order.

2. Tax benefits 

Saving tax is one of the primary PPF account benefits. It is entirely tax-free. PPF account tax benefits include tax deductions under section 80C of the IT Act. Apart from offering guaranteed returns, the entire value of an investment is exempted, making it a tax-efficient investment.

3. Minimum Investment with Good Returns

Knowing your returns is essential when it comes to investing, and one of the big PPF account benefits is that it offers good returns. You can start your PPF account with as little as Rs 500 and a maximum of Rs 1,50,000, depending on your financial capacity. You can make small monthly payments into the account, or you can also make one deposit every year. The interest offered on a PPF account is 7.1% and is compounded annually.

Know Your Eligibility

Now that we have discussed the PPF account benefits let us see who is eligible to invest. If you are convinced of the PPF benefits, it’s time to learn about the eligibility criteria. Here are some basic yet important criteria that one should meet to open a PPF account: -

• You should be an Indian citizen.
• You can only have one PPF account under your name. The second account can be opened in the name of a minor as a guardian.
• NRIs and HUFs are not allowed to open a PPF account. But if they have an existing account, then the account is active until the date of completion. However, they won’t be able to extend the tenure further.

Steps to open a PPF account

After knowing what PPF is and PPF what are PPF account benefits, it is time to focus on how a PPF account is opened. There are two methods through which you can open a PPF account. You can either open it online or offline. Almost every nationalized and private bank in India gives the option of opening a PPF account. If you are able to meet the eligibility criteria, then you can use one of the methods to open the PPF account.

Opening a PPF account through Online Mode

To open a savings account, you need a savings bank account with active mobile or internet banking: -

1. Log in to internet banking or mobile banking to open a PPF account online.

2. Search for “Open a PPF account” and select the option.

3. Once you select to open a PPF account, you will be asked to open a self-account and a minor account option. If you are opening the account for yourself, then choose “self account,” and if you are opening the account on behalf of a minor, select “minor account.”

4. After selecting the account type option, you will be asked to fill out a form with relevant details. Enter all the details accurately on the form.

5. Once an application form is filled and submitted, an OTP or one-time password will be sent to the registered mobile number or email address.

6. Verify the account via OTP, and your PPF account will be successfully created. You will receive a confirmation email that your account has been opened.

Opening a PPF account through Offline Mode

Current PPF interest rate

The final thing that we need to keep in mind after understanding PPF account benefits is current interest rates. The current interest rate offered on a PPF account is 7.10% compounded annually. However, please note that this interest rate can be changed by the Finance Ministry.