It is very important to find a good option for investment. Because only then will a better future be created by hard-earned money. Many kinds of problems arise if you do not invest in the right place. To stay away from all these hassles, PPF proves to be a better investment tool in terms of investment.
PPF Rule: This is a government saving scheme, where you get a fixed return on the investment amount. The investment amount matures in a period of 15 years. Such investors also have to face problems regarding pre-closure. In such a situation, it is important to understand what are the rules related to PPF.
Who can invest in PPF?
Public Provident Fund (PPF) is a scheme in which any Indian citizen can invest. This account can be opened at any bank or post office as per your convenience. The amount deposited in the PPF account matures in 15 years. After investing in it, the investor has to continue the investment for 15 years.
You can deposit a minimum of Rs 500 and a maximum of Rs 1.50 lakh per share in PPF. Being an EEE category scheme, you can deposit up to Rs 1.50 lakh in it in a financial year. Tax benefits are available on the interest received on this and the amount received on maturity.
There will be bumper income from interest
Investors choose PPF for long term investment. If you deposit Rs 5000 in the account every month in this scheme, it will become Rs 60,000 in a year. If the same amount is deposited continuously for 15 years, a total of Rs 9 lakh will be deposited in the PPF account. The annual interest received on investment in PPF is 7.1%. In this sense, in 15 years, Rs 7,27,284 will be earned from interest only. That is, the total value of the investor’s deposit will become Rs 16,27,284 on maturity.
What is Public Provident Fund i.e. PPF?
Before understanding the rule related to pre-closure of PPF, know that this is a government scheme, in which there is a government guarantee on investment. That is, investors can invest money in tension free Public Provident Fund i.e. PPF.
The amount deposited in the PPF account matures in a period of 15 years. At present, interest is being offered at the rate of 7.1% per annum on deposits in PPF. Only up to Rs 1.5 lakh can be invested in this government scheme during a financial year.
What is the rule of pre-mature closure?
If investors want to close the PPF account before maturity, then this permission can be obtained after 5 years. The investor should have a solid reason for pre-closure. Before the completion of 5 years in the government scheme, investors can only take a PPF loan, that is, this account cannot be closed. So let’s see what are the conditions for pre-mature closure…
The investor or spouse or dependent children have a life-threatening disease. Money is needed for its treatment. In such a situation, the account can be closed before 15 years.
Money is needed for one’s own higher education or child’s higher education.
In case of change in the resident status of the account holder i.e. becoming an NRI.
The account can also be closed before maturity in case of death of the account holder. In this situation, the 5-year rule does not apply.
Will money be deducted on withdrawal before maturity?
If the investor withdraws the amount deposited in the PPF account in the pre-mature period, then a charge is levied on it. Under this, the amount is returned after deducting 1% of the interest on the total deposit. Let us tell you that tax exemption is also available on the investment fund in the scheme. Under this, investors are given a tax exemption of up to Rs 1.5 lakh in a financial year.
