7 reasons to buy PPF after Union Budget 2014

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The Budget has provided a big boost to Small Savings Scheme offered by the Post office, including the popular Public Provident Fund (PPF). Here are 7 reasons to buy the PPF after the Union Budget.

Limit now raised to Rs 1.5 lakh

The Union Budget has now raised the limit in which you can invest in PPF to Rs 1.5 lakh from the earlier Rs 1 lakh. This has been the demand of several investors for some time now. The minimum  investment in PPF continues to remain Rs 500 every year.

Tax free interest income

PPF is the only fixed yielding interest instrument, whose interest is tax free apart from Tax Free Bonds. This makes the instrument a great investment opportunity.

Only instrument to provide tax free interest and 80C benefits

PPF is the only instrument in the country that offers tax benefits under SEC 80C along with interest income being tax free in the hands of the investor. There is no other instrument that offers both the benefits.

Interest rate at 8.7 is competitive

The interest rate at 8.7 per cent is slightly lower than the interest rates offered on banks, but, one must not forget that interest from bank deposits is taxable. Also, the interest on PPF is revised every year. 

Forced lock-in a great opportunity

The full amount in PPF can be withdrawn only after the completion of 10 years. This makes PPF an excellent investment as one is compelled to invest, with partial withdrawal only after the completion of 7 years.

Can invest as little as Rs 500 every year

The ability to invest in amounts as small as Rs 500 through the year makes this an excellent scheme for small savers.

No new account for NRIs, but existing accounts can continue

If you have become a NRI after opening your PPF account, you can continue your account. However, NRIs cannot open a new account.

Read more about: ppf, post office, small saving schemes
Story first published: Monday, July 14, 2014, 8:40 [IST]
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