Although most investors prefer equity investments to produce high returns, any diverse portfolio is incomplete without highly stable, fixed-income securities. For investors looking for decent, fixed returns with full protection and tax benefits, PPF Account is a go-to option.

The most popular investment in India to date is the Public Provident Fund (PPF) scheme. If you are searching for an exemption on the money you are spending, a non-taxable interest, and a tax-exempt maturity amount, this is the instrument for you. Under this scheme, one has to open a PPF account, and under section 80C deductions, the sum deposited within a year will be claimed.

5 Basic Things to Know About a PPF Account

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Although it is now simpler than ever to open a PPF Account, every investor should know a few crucial items before investing.

Five of the following essential details of the PPF system are:

1. Investment Amount

The minimum investment sum in PPF can be Rs 500 as per the PPF rules, and the maximum can be Rs 1.5 lakh in a year. For all the PPF accounts kept by you and even by a minor who has you as the guardian, this overall cap applies.

A lump sum amount may be spent by investors or monthly contributions that can only be up to 12 per year.

2. PPF Maturity

India’s PPF maturity period is 15 years. You will extend it in blocks of 5 years after the completion of this duration. The last date of completion of the financial year shall be taken as the date of commencement, by the PPF scheme law, irrespective of the month of the fiscal year you have invested.

E.g., the calculation will be done as of March 31, 2019, if you started investing in PPF in October 2018. This means the maturity of 15 years will be on April 1, 2034. There are online PPF calculators that can help you with calculating the maturity period too.

3. PPF Interest Rate

The interest rate of the PPF is directly related to 10-year government bond yields and hence varies regularly. The annual interest you receive on your PPF investment is currently 8 percent. Annually, the interest is compounded and not billed to the lender.

This makes it one of the best choices, including retirement planning, for achieving long-term financial goals.

4. Tax Benefits

The tax benefits it provides are one reason for the widespread popularity of the PPF in India. PPF enjoys the tax status of EEE (Exempt-Exempt-Exempt). Under Section 80C of the IT Act, all of the contributions made to a PPF scheme in India are liable for deductions. The interest that you receive for 15 years is completely tax exempt.

In other words, all proceeds at the end of the maturity period are excluded from tax, including your investment and the interest received.

5. Loan Against PPF

The loan facility is also available with a PPF account between the 3rd and 6th financial year of your investment, as per the PPF scheme’s rules. The first loan will be taken from the investment after three years. At the end of the 2nd year, the loan balance will be up to 25 percent of the amount you have invested in your PPF account.

You can take out another loan after repaying this loan before the 6th year of your investment is completed.

You are all set to start investing in PPF now that you know the PPF investment amount, maturity date, and the PPF interest rate. To open a PPF account, pick any reputed bank like Axis Bank and visit their official website. You can now start investing in PPF instantly and in a hassle-free way with your online PPF account.