Because of the good profits and tax benefits of the Public Provident Fund (PPF), it’s becoming a popular choice for everyone.
The money you put in this is not taxed under Section 80C. Also, the interest you get on this stays tax-free under Section 10.
Many people believe that if they invest money in PPF for a long time, they can become wealthy by the time they retire.
If you’re also considering investing in PPF, then you should follow 8 rules about it.
1. Who can open PPF account?
PPF is a plan that grows for 15 years, and you can continue it for more time in chunks of 5 years.
You can start it at a bank or post office. You can move the account from one place to another, whether from a bank to a post office or from a post office to a bank. Anyone of any age can start it.
2. PPF deposit, when and how often?
A person can put money in a PPF account up to 12 times in a year.
You can choose to deposit money every month, or if you prefer, you can deposit the entire amount at the beginning of the year.
3. PPF Interest Rate
You receive guaranteed returns on PPF. This is because its money is not invested in the stock market, so returns do not go up or down based on the stock market’s performance.
The government decides the interest rate on PPF, and they check it every three months. Currently, this rate is 7.1 percent.
4. PPF Deposit Limit
You need to put at least Rs 500 in PPF to keep the account active. You can deposit a maximum of Rs 1.5 lakh in this account in a year.
If you put more money than this, you won’t get any interest on it, and it won’t be eligible for tax exemption under 80C. The extra amount is returned to you without any interest.
5. PPF account in the name of the child
Parents can open a PPF account in the name of their child. If a grandparent wants to do it for their grandchild, they can’t. Only parents can open an account in the child’s name.
6. How many accounts can be opened
You are allowed to have just one PPF account, and it can be opened either at a bank or a post office, but not at both. I
f you accidentally open two accounts, the second one will be considered invalid.
However, you can transfer your account from one place to another if needed.
7. Premature closure of PPF
If you decide, you can shut down your PPF account before it’s supposed to end. This, however, can only happen after 5 years have passed.
There are specific situations under which you can stop it early and take out the money.
One condition for closing the PPF and taking out funds prematurely is if the money is needed for a severe illness.
It can be withdrawn for treating the account holder, their spouse, child, or parents.
Additionally, you’ll need to obtain necessary permissions from the medical authority.
8. Separate form for nomination
When you fill out the PPF form (Form-A), there is no option to nominate someone. For this, you need to complete a separate form.
Remember to fill out the nomination form (Form-E) to avoid any legal issues regarding the nominee in the future.