Public Provident Fund Is The Most Popular & favorite Tax Saving Scheme. Interest Earned on PPF is tax Free.
As This scheme is governed by Government of India,It Is Totally Safe Investment.
PPF Scheme is For a Period of 15 Years. Minimum Investment required in PPF Account is Rs. 500/- Per Year & Maximum 1 Lac Rs. Per Year.
Interest Rate of PPF
The Interest on PPF is No Longer Fix, Every Year Government Declare Interest Applicable On PPF.For The Fiscal Year 2013-14,Ideal investment option for both salaried as well as self employed classes.The Government will Pay 8.7%.
Interest on Investment is Compounded Annually and its Credited at The End of the year.
Ideal investment option for both salaried as well as self employed classes.
- Investment up to INR. 1,00,000 per annum qualifies for IT Rebate under section 80 C of IT Act.
- The rate of interest on the subscriptions made to the fund on or after 01.12.2011 and balances at credit of the subscriber in the existing PPF account shall bear interest at the rate of eight point eight per cent (8.80%) per annum.
- Loan facility available from 3rd financial year upto 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011.
- Withdrawal permitted from 6th financial year.
- Free from court attachment.
- An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.
An example is shown below describing, if an individual invest Rs 1,00,000/ year, then in 15 years he will have an amount of Rs 30.64 lakhs. The interest portion is completely tax free. Principal portion can be claimed as a deduction under Sec 80C.
Year
|
Principal
|
YoY investment
|
Interest
|
P+I
|
1
|
1,00,000
|
-
|
8,700
|
1,08,700
|
2
|
1,08,700
|
1,00,000
|
18,157
|
2,26,857
|
3
|
2,26,857
|
1,00,000
|
28,436
|
3,55,293
|
4
|
3,55,293
|
1,00,000
|
39,610
|
4,94,903
|
5
|
4,94,903
|
1,00,000
|
51,756
|
6,46,660
|
6
|
6,46,660
|
1,00,000
|
64,959
|
8,11,619
|
7
|
8,11,619
|
1,00,000
|
79,311
|
9,90,930
|
8
|
9,90,930
|
1,00,000
|
94,911
|
11,85,841
|
9
|
11,85,841
|
1,00,000
|
1,11,868
|
13,97,709
|
10
|
13,97,709
|
1,00,000
|
1,30,300
|
16,28,009
|
11
|
16,28,009
|
1,00,000
|
1,50,337
|
18,78,346
|
12
|
18,78,346
|
1,00,000
|
1,72,116
|
21,50,462
|
13
|
21,50,462
|
1,00,000
|
1,95,790
|
24,46,252
|
14
|
24,46,252
|
1,00,000
|
2,21,524
|
27,67,776
|
15
|
27,67,776
|
1,00,000
|
2,49,496
|
31,17,273
|
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