Investment in PPF Account: Public Provident Fund (PPF) remains the preferred investment option due to the high interest rate. By investing in it, you get triple benefit of tax exemption. The special thing is that there is no risk in investing money in it.
New Delhi. Public Provident Fund ie PPF remains the preferred investment option due to the high interest rate. By investing in it, you get triple benefit of tax exemption. The special thing is that there is no risk of investing money in it because it is protected by the government. The interest on investment in PPF is 7.1 percent.
However, there is also a hitch on the interest earned on investment. By understanding this, if you invest, then you can increase the return on it. Interest is calculated on the balance between the 1st to 5th of every month on the money deposited in the PPF account. In such a situation, efforts should be made to deposit money in the PPF account between the 1st to 5th. If possible, instead of putting a little money in the PPF account throughout the year, deposit more money only between April 1-5. This will bring more interest to your account.
In this way you will get the third benefit
- In this, tax benefit is available under section 80C of the Income Tax Act on investment up to Rs 1.5 lakh.
- The interest earned on this investment is tax free.
- There is no tax to be paid on the amount received on maturity.
Can become millionaire
- Actually, there is a lock-in period of 15 years on investment in PPF. After this, you can withdraw money from the PPF account or extend it for a period of 5-5 years. If you continue to invest in it for 25 years, then the maturity amount will be more than one crore rupees.
- Suppose, if the current PPF rate of 7.1 per cent remains the same for the next 25 years. If you invest 1.5 lakh rupees in PPF account every year, then after 25 years on maturity, you will get 1.03 crore rupees.
Benefits of loan facility
There is facility to take personal loan against PPF account. This benefit can be taken in the third and sixth year from the opening of the account. This is especially beneficial for those who want to take a short term loan and do not want to pledge any assets. There is also an advantage of taking loan benefit from PPF account that interest has to be paid at a lower rate than the loan taken from banks. In its repayment also, there is a facility to pay in lump sum or in installments.
