Public Provident Fund (PPF) is a great investment opportunity that everyone can take advantage of right away. It's one of the best fixed-income investments because it offers high returns, is risk-free, and most significantly, is tax-free. State Bank of India (SBI), ICICI Bank, and HDFC Bank, among others, offer online PPF account opening online. In a financial year, you can make up to 12 transactions and transfer up to Rs.1.5 lakh from one public provident fund account. Your transactions will be denied if you make more than 12 transfers. They're perfect for risk-averse investors who want to see their money grow over time. Furthermore, the tax advantages of PPF on both expenditure and returns make it a compelling choice.
Why everyone should have a PPF account?
The risk-free interest rate on PPF investments: With a scheme guaranteed by the government, you will earn an attractive interest rate of 7.1 percent per annum. On an annual basis, the interest on a PPF is multiplied. Every year, on March 31st, you will receive your interest payment. While the PPF has a 15-year lock-in term, the funds in your account can be used in a variety of ways. In the third and sixth years, you can take a loan. You must repay the loan in 36 months at a rate that is 2% higher than the rate of interest you receive. However, this balance can only be withdrawn after the account has been active for 5 years. You can withdraw up to 50% of the total balance on your line of credit at the end of the fourth financial year or the end of the previous year, whichever is lower.
How to transfer funds from different bank savings account to your PPF account?
Step 1: Login into your net banking
Step 2: Go to the Fund Transfers section
Step 3: Click on add a new third party beneficiary
Step 4: Enter Your PPF account details such as For Payee name, use your exact name as in your public provident fund
Step 5: Use your PPF number as the Payee Account number.
Step 6: Enter the IFSC code of the PPF branch
Step 7: Click on Confirm and Submit
You will be able to make a transfer easily after your account has been added as a third-party beneficiary.
It should be very easy for you to transfer your money if your PPF account and your bank account are both at the same bank branch and are already linked.
If you want to deposit your performance bonus or variable pay into your PPF account on a regular basis, you can use the net banking route to set up standing instructions for each transaction.
Individuals should go to their bank and issue them an ECS mandate, which allows them to move a set amount of money from their bank account to their PPF account. You won't have to think about taking time out to ensure the money is transferred into your PPF account if you use this option because the bank will do it for you.
Tax Benefits of PPF
One of the best features of a PPF is its exempt-exempt-exempt (EEE) tax status, which makes it one of the few investments in India to have such a benefit. The amount you spend up to Rs. 1,50,000 is tax-deductible, the interest you gain is tax-free, and the maturity amount you receive after 15 years is also tax-free. As a result, it is one of the most tax-efficient investments available. If you are in the highest tax bracket, you are likely to pay a significant amount of tax. In reality, other instruments' post-tax yields will fall sharply, making the PPF a good investment choice when compared to other choices in the same category.