PUBLIC PROVIDENT FUND ACCOUNT IN POST OFFICE & ITS BENEFITS - for information
PPF
or public provident fund is one of the most popular small savings
schemes. Its popularity is understandable given that PPF enjoys EEE or
exempt, exempt, exempt status in terms of income tax implication -
contribution, interest and maturity proceeds all are tax free. Interest
rate on PPF and other small savings scheme are being reset every quarter
from April last year, as compared to the annual mode earlier. The
interest rates on PPF and other small savings schemes are linked to
yields on government bonds, with a small mark-up.
PPF deposits are eligible for tax deductions under Section 80C. A maximum of Rs. 1.5 lakh can be claimed in one financial year.
Interest
rate on PPF and other small savings scheme are being reset every
quarter from April last year, as compared to the annual mode earlier.
Here are some other benefits of PPF account:
Loan Against PPF
A
PPF account holder can avail of loan facility in the third financial
year from the financial year in which the account was opened. The loan
can be taken up to 25 per cent of the amount in the account at the end
of the second year immediately preceding the year in which the loan is
applied for. The rate of interest on the loan shall be at 2 per cent per
annum above the PPF interest rate. The loan is repayable in 36 months.
PPF Partial Withdrawal
Partial
withdrawal is permissible every year from 7th financial year from the
year of opening account, according to India Post's website. The maximum
amount is limited to 50 per cent of the balance at the end of the fourth
year immediately preceding the year of withdrawal or the amount at the
end of the preceding year, whichever is lower.
Premature Closure Of PPF Account
Premature
closure is allowed only after the account has completed five financial
years and under specific conditions like expenditure towards medical
treatment and higher education, according to an amendment in 2016.
PPF Account Extension
The
original duration of a PPF account is 15 years. Thereafter, on
application by the subscriber, it can be extended for one or more blocks
of 5 years each.
PPF Interest Rate Calculation
The
interest rate on PPF is compounded annually. Interest is paid on 31st
March every year. 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. (With Agency Inputs)
courtesy:-SAPOST
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