Every government-backed investment scheme has its own advantages and disadvantages. It is always better to select one according to your needs. While taking in into consideration the rate of interest, lock-in period, risk and tax exemptions PPF holds a good position among all other small saving investment options available in India.
PPF is a government-backed scheme, and thus you can rest assured about your money.
Check out the list of the advantages and benefits of Public Provident Funds:
No special eligibility
No specific eligibility is required for opening PPF accounts. Any Indian national, irrespective of age and income class can open a PPF account in any bank or post offices in India. NRI's can not open PPF account in India. Indians who are NRIs at the time of opening of the account. You can approach any of the authorized banks or post offices with money and required documents to open a PPF account. Now Aadhaar card is required for opening PPF.
PPF account has a lock-in period of 15 years. You can't withdraw your money at this time. This helps to grow your money grow. The entire amount in your PPF account could be withdrawn only on maturity. This adds financial security to your deposits. In times of financial crises, partial withdrawals are permitted subject to certain ceiling limits. Premature closure of a PPF account is permissible only in case of death.
Initial deposit is Rs 100
You need just Rs 100 to start a PPF account. With a minimum initial deposit of just Rs. 100. Accounts could be opened at any branch of the Post office or State Bank of India (SBI) or branches of its associated banks. Nationalised banks also offer the facility to open PPF account.
Deposits in a PPF account enjoy a tax deduction under section 80C. The entire maturity amount including the interest is non-taxable. But PPF deposits are exempt from wealth tax also. This complete tax exemption coupled with the highest rate of interest makes PPF an unavoidable choice among small saving investment schemes.
PPF for minors
This is considered to be a major advantage of PPF accounts. If you are a young parent wanting a secure investment, you can open a PPF account in the name of your child for his or her education and marriage. You can enjoy tax exemption on the investments made towards your child's PPF account along with claiming tax exemption against your own PPF account.PPF account holder can take loans or make partial withdrawals against your PPF account. It is one of the major benefits of PPF account. Loans from PPF account can be taken from the third year onwards till the sixth year.
Loans against PPF
PPF account holder can take loans or make partial withdrawals against your PPF account. It is one of the major benefits of PPF account. Loans from PPF account can be taken from the third year onwards till the sixth year.