How to open a PPF account for tax exemption purposes? A step-by-step guide
Public Provident Fund (PPF) stands out as a highly favoured choice for individuals in India looking to make tax-saving investments. Its enduring popularity can be attributed to various compelling reasons: Triple tax exemption: PPF enjoys the exempt-exempt-exempt (EEE) status, ensuring that investments, earnings, and maturity proceeds remain entirely exempt from taxes. This feature sets it apart as notably appealing compared to other tax-saving schemes.
Guaranteed returns: Supported by the Government of India, PPF provides stable and attractive interest rates, currently standing at 7.1% per annum (as of January 2024). While it may not offer the highest returns available, it delivers reliability and predictability for long-term financial objectives. Long-term investment: The mandatory 15-year lock-in period promotes disciplined savings and aids individuals in achieving enduring financial goals such as retirement.
Accessibility: With a modest minimum investment of Rs. 500 and a maximum limit of Rs. 1.5 lakh per year, PPF is within reach for individuals across all income levels.
Flexibility: After the 7th year, PPF allows partial withdrawals, and loans can be obtained against the balance after the third year, providing a degree of liquidity during challenging periods. Safety: As a government-backed scheme, PPF ensures complete security for invested funds, minimizing risk when compared to investments linked to the market. The PPF scheme, unaffected by market volatility, provides consistent and assured returns, making it a favoured retirement savings option for investors who prefer low risk.
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