This Post Office Scheme Offers Better, Higher Interest Rate Than Many Top Bank FDs

Published: Thursday, June 30, 2022, 13:16 [IST]

Investors always look for such saving schemes that can offer them attractive returns along with tax benefits for optimum utilization of their hard-earned money. One such scheme is Public Provident Fund (PPF). This saving scheme does not only provide investors with guaranteed returns but tax benefits as well. The Indian government permitted investors in the country to open a PPF account at India Post Office.

Users can open a PPF account at post office or bank as features remain the same. It is worth mentioning that Indian Post Offices provide users with online facilities for smooth access to PPF and several other government saving schemes online. Let us find the key details of Public Provident Fund or PPF scheme:

1. PPF Interest Rate

The current interest rate available under this saving scheme is 7.1% per annum (compounded yearly). It is worth noting that interest rate in this scheme is higher and better than many top bank fixed deposits. The minimum investment to be made is Rs 500 and it can to a maximum of Rs 1,50,000 in a financial year. Users can make deposits in lump-sum or in installments. Users can open the account by cash/cheque and in case of cheque the date of realization of cheque in government account should be date of opening of account/subsequent deposit in account.

Meanwhile, the interest rate will be applicable as notified by fiancé ministry on quarterly basis. The interest will be calculated for the calendar month on the lowest balance in the account between the close of the fifth day and the end of the month. Interest will be credited to the account at the end of every financial year.

Tax Free: Interest earned in this saving scheme remains exempt from tax or tax free under Income Tax Act.

2. Maturity

The maturity tenure for PPF scheme is 15 financial years barring the financial year when account was opened. After maturity, the investors get three options. He can take maturity payment by depositing account closure form along with passbook of relevant Post Office. He may retina maturity value in his account further without deposit and the PPF interest rate shall be applicable and payment can be taken any time or he may take one withdrawal in each FY. He may extend his account for further block of 5 years (within one years of maturity) by deposit prescribed extension form.

3. Premature Withdrawals

Investors can go for premature withdrawals as they are allowed but only after completion of 5 years of consistent investment in some conditions. In the situation of some life-threatening disease of account holder, spouse or dependent children, incase of higher education of account holder or dependent children, and in case of change of residential status of account holder. It is important to note that at the time of premature closure 1% interest shall be deducted from the date of account opening/date of extension as the case may be.

4. Loan Facility

Loan can be taken before expiry of five years from the end of the year in which the initial subscription was made. Only one loan can be taken in a Financial Year.