A Public Provident Fund or PPF account is not only an funding software that helps you save earnings tax outgo in your funding and its return. There are numerous different advantages past earnings tax {that a} PPF account holder should know. As per the PPF account guidelines, one can get mortgage towards one’s PPF steadiness in the course of the monetary disaster together with limitless extension facility.
Speaking on the PPF account advantages aside from earnings tax exemption beneath Section 80C of the Income Tax Act; SEBI registered tax and funding professional Jitendra Solanki stated, “PPF is one of the high yielding (current PPF interest rate is 7.1 per cent) risk-free investment instruments, which is backed by the Government of India (GoI). It can be used as an avenue to raise fund as well. One can apply for a short-term loan against one’s PPF account.”
Asked in regards to the prime 5 advantages of PPF account past earnings tax exemption Jitendra Solanki listed out the next PPF account advantages:
1] Risk free funding: PPF funding is 100 per cent risk-free as it’s a GoI-backed small saving scheme, which isn’t linked to the inventory market motion. In case of financial institution default, one’s PPF steadiness quantity will stay 100 per cent secured. Most importantly, the PPF steadiness will not be added in ₹5 lakh insurance coverage assured by the GoI to checking account holders.
2] Avenue for fund raiser: In case of economic emergency, a PPF account holder can get short-term mortgage at mere 1 per cent rate of interest each year. However, one can get this mortgage towards PPF facility solely from third to sixth yr of PPF account opening. After six years of PPF account opening, one turns into eligible for partial withdrawal from the PPF steadiness.
3] Unlimited extension facility: A PPF account has 15 years maturity interval. But, one can lengthen one’s PPF account in blocks of 5 years by submitting ‘PPF Account Extension Form.’ This will be completed for limitless variety of occasions. So, a PPF account holder who has opened PPF account within the nascent part of 1’s profession can use the PPF account as retirement-oriented funding software purchase utilizing this limitless extension facility.
4] Ease of funding: A PPF account holder can make investments minimal ₹500 and most ₹1.5 lakh in a single monetary yr. One can do 12 deposits in a single’s PPF account in a specific monetary yr. So, one can deposit cash in a single’s PPF in month-to-month mode like SIP as properly.
5] Compounding profit: Since, PPF account is a long-term funding. The investor is eligible for curiosity on curiosity means compounding profit on one’s deposits.
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