If you’re looking for a safe way to invest with guaranteed returns, a Public Provident Fund (PPF) account could be a great choice.
One advantage of PPF is that it can be easily opened online from home. Here’s a simple guide on how to open a PPF account, who can open one, and the interest rates offered.
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What is a PPF Account?e
A PPF account is a government-backed savings scheme designed to keep your savings safe while offering good returns.
A key feature of PPF is that both the interest and the maturity amount are tax-free. The investment period is 15 years, with an option to extend it.
Who Can Open a PPF Account?
Indian Citizens: Any Indian citizen can open a PPF account, whether they are an adult or a minor. For minors, parents or guardians can open and manage the account.
Non-Resident Indians (NRIs): NRIs cannot open a new PPF account. However, if they already have a PPF account, they can continue it but cannot open another.
How Much Can You Invest in PPF?
You can invest a minimum of ₹500 and up to a maximum of ₹1.5 lakh in a PPF account per year.
This amount can be deposited in one go or in multiple installments. Investing up to ₹1.5 lakh also qualifies for tax exemption under Section 80C, helping you save on income tax.
Interest Rates on PPF Account
The government sets the interest rate on PPF every quarter. Currently (2024-25), the PPF interest rate is around 7.1% per year, calculated on a compounding basis.
This interest is tax-free, which means you get to keep the full benefit.
How to Open a PPF Account Online from Home
If you have an account with major banks like SBI, HDFC, ICICI, or Bank of Baroda, you can open a PPF account online by following these steps:
Log in to NetBanking: Access your bank’s netbanking website or app.
Choose PPF Account Option: Go to the ‘Investment’ or ‘Services’ section and select the option to open a PPF account.
Provide Your Details: Enter personal and nominee details.
Upload Documents: Submit identity documents such as your Aadhaar card and PAN card.
Make an Initial Deposit: Deposit a minimum of ₹500 to activate the account.
Confirmation: Once the process is complete, you will receive confirmation, and your PPF account will be opened.
PPF Maturity and Withdrawal Rules
The PPF account matures after 15 years, but you can extend it in 5-year increments.
After 15 years, you can withdraw the entire amount, or, if needed, make a partial withdrawal after 7 years. Additionally, a loan against your PPF balance is available after the third year.
Key Benefits of PPF
Safe Investment: PPF is government-backed, ensuring security.
Tax Savings: Investment qualifies for tax deduction under Section 80C.
Tax-Free Interest: Both the maturity amount and interest are tax-free.
Loan Facility: You can take a loan against the account after 3 years.