Currently, the PPF interest rate is 7.10 percent under the PPF Account Rules. PPF interest is calculated on monthly basis but compounded annually.
Public Provident Fund is a government-backed savings and tax saving scheme. Which helps the investor to create a retirement fund while saving on annual income tax. The PPF account is 100% risk free and is one of the limited savings schemes that can beat the 6 per cent average annual inflation rate. Currently, the PPF interest rate is 7.1 per cent but there are some other important rules that an investor should know. Today we are going to tell you about 10 such important rules, about which it is very important for you to know.
After all, what are those rules
1] PPF interest rate: At present, the PPF interest rate is 7.10 percent. PPF interest is calculated on a monthly basis but compounded annually.
2] PPF Interest Calculator: PPF interest is paid on the minimum PPF account balance available between the 5th of the month to the last date. So, if a PPF account holder makes deposits from 1st to 4th of the month, the investor is also eligible for PPF interest for that month. Hence, it is advisable for monthly PPF investor to invest from 1st to 4th of the month whereas for lump sum annual depositors, they should deposit from 1st to 4th April and get PPF interest for the entire financial year on their deposits. should do.
3] PPF Deposit: A PPF account holder needs to deposit a minimum of Rs 500 in a financial year to keep his account active, while the maximum amount should not exceed Rs 1.5 lakh in a financial year. In case of more than that, interest will not accrue on the balance amount. This means that a PPF account holder can deposit a minimum of Rs 500 to a maximum of Rs 1.5 lakh in his PPF account.
4] PPF Account Rule: An individual can have only one PPF account and opening of joint account is not allowed in case of PPF account.
5] PPF Withdrawal Rule: A PPF account holder can completely withdraw the amount from the PPF account only after the completion of 15 years on maturity. However, in case of financial emergency, the scheme allows partial PPF withdrawal from the 7th year of account opening. Premature withdrawal is allowed after the completion of 4 years of opening the PPF account.
6] Tax Benefits: As mentioned above, any PPF deposit above Rs 1.50 lakh in a financial year is neither eligible for PPF interest rate nor for income tax exemption. As per Section 80C of the Income Tax Act, PPF deposits up to Rs 1.50 lakh in a financial year can be claimed for income tax benefits. This tax benefit has to be claimed under section 80C while filing income tax return. Similarly, PPF maturity amount is 100% tax free at the time of withdrawal.
7] How to Activate PPF Account: Failure to deposit a minimum of 500 in a financial year leads to the freeze of the PPF account. There is a penalty of Rs 50 per year for activating the PPF account.
8] Protection against bankruptcy: A PPF account cannot be attached by an individual to repay the loan, not even a court decree.
9] PPF Account Extension: On completion of the maturity period of 15 years, the account holder can extend his PPF account for an unlimited number of years in blocks of 5 years.
10] Loan Against PPF: The account holder is eligible for loan against PPF account between 3rd and 5th year of account opening. The loan amount can be maximum 25% for the second year immediately preceding the loan application year.
