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Topics: Investment, Finance, Bond
10 Things you may not know about PPF
One of the popular, preferred, and preeminent tax saving investments is PPF – Public Provident Fund.
Let us discuss in detail about PPF in this article and understand it comprehensively and completely.
1) Where to open the PPF account?
PPF accounts can be opened in a post office or in selected bank branches. The regular KYC documents need to be submitted for opening a PPF account with a minimum investment of Rs.500.
2) What is the interest rate?
The current interest rate is 8.70% p.a. The interest rate will change every financial year in accordance with the average bond yield of the previous year. The interest rate will be fixed 0.25% above the 10 year government bond yield.
3) How is the interest calculated?
For the balance amount in your PPF account the interest is compounded annually. However, the interest calculation will be done each and every month.
If your contribution to the PPF account is credited on or before 5th of that month, then that contribution will bear interest for that month too. If it is credited after 5th of that month, you will get interest only from the subsequent month. Therefore, if you make sure your contribution is getting credited in your account on or before 5th of that month, and then you will not miss the interest for that month as well.
4) What is the tax benefit?
Under Section 80 C, whatever the contribution you make in PPF is eligible for tax deduction. Also the interest from PPF is also tax free. These tax benefits are available as of now. If DTC is implemented, then the tax benefits will change prospectively and not retrospectively.
5) What is the minimum and maximum investment?
The minimum amount needed to be invested every year is Rs.500. The maximum amount of investment allowed every year is Rs.1 lac. You can make investments through a maximum of 12 installments per year. If your minor child also holds a PPF account then the combined limit of both the PPF account is

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