Maturity of PPF account happens in 15 days. If the money is deposited for 15 years, the interest gets accumulated in the principal amount and then interest is earned on it. In this way a good amount gets deposited in the account.
Public Provident Fund: Public Provident Fund (PPF) is one of the most popular savings schemes in India. If this scheme belongs to the central government, the money and returns invested in it are safe and guaranteed. Investing small savings in Public Provident Fund can yield returns on the same. This scheme can also be used for retirement. The tenure of PPF is 15 years. It can also be extended for five years.
It is not that PPF is only for the big people of the account. A Public Provident Fund (PPF) account can be of great help for children as well. If you open a PPF account for your child at an early age, then by the time the child grows up, the account will have matured or will be nearing maturity.
A child’s PPF account can be operated by his parents or legal guardians. Only one account can be opened for one child.
Benefits of PPF account for children
Maturity of PPF account happens in 15 days. If the money is deposited for 15 years, the interest gets accumulated in the principal amount and then interest is earned on it. In this way a good amount gets deposited in the account. If you open a child’s PPF account at the age of 5, then when he turns 20, then a good amount can be deposited for his higher education. PPF account can be extended further for 5 years.
If the child does not withdraw money from the PPF account after maturity and extends it for another 5 years, then this amount can be useful for his future.
Start saving with Rs.500
Investment in PPF account can be started with a minimum of Rs 500. One can deposit a maximum of Rs 1.5 lakh in a year.
Tax benefits
The benefit of tax exemption is also available on the amount deposited in the PPF account. Exemption on PPF account comes under EEE category. This means that the year in which the investment is made in PPF will get tax exemption under section 80C of Income Tax. Along with the investment amount, there will be no tax on the interest earned on PPF.
The interest rate for PPF is determined by the government every quarter. Currently, the interest rate of PPF is 7.1 percent. Interest rates are announced by the government every quarter. The interest amount is calculated on the lowest balance after the 5th of every month, till the last day of the month. Therefore, PPF investors are advised to deposit money in their account before the 5th of every month.
PPF account holder can take loan against his PPF balance. Loan can be taken only between the beginning of the third year and the end of the sixth year from the date of account opening.
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