PPF Calculator: Top 5 lesser known facts that a public provident fund account holder must know
PPF Calculator: Public Provident Fund or PPF account is one of the most preferred investment tools among the tax-saving investment options. However, the way stock markets and equity yield has fallen in the recent four-five months, importance of the risk-free government-backed small saving schemes have gone higher. As PPF has been one of the most traditional risk-free investment options, people do open PPF accounts in various banks and post offices. But there are some lesser known facts that a PPF account holder must know as it would help him or her to maximise money growth.
Income tax exemption under EEE category
Speaking on the benefit of PPF account benefits SEBI registered tax and investment expert Jitendra Solanki said, "PPF account not only ensures guaranteed returns post-maturity, it also allows the investor to claim income tax exemption under Section 80C. A PPF account holder can claim income tax exemption up to Rs 1.5 lakh per annum and the PPF rate of interest and PPF maturity amount is also exempted from the income tax outgo." Asked about the lesser known facts that may help an investor to maximise money growth, Solanki listed out the following five. Photo: Pixabay
PPF rate of interest calculation
It is recommended that one must invest in a PPF account before the fifth of every month in case of monthly contributions. This is because the balance taken for PPF rate of interest calculation is taken as the minimum between the fifth day of the month and end of the month. Photo: Pixabay
PPF lock-in period
It's a well known fact that PPF accounts have a lock-in period of 15 years. But it doesn't mean if you open a PPF account on 17th September 2020, then the maturity of the PPF account will be 18th September 2032 because the PPF maturity date is not calculated from the date of the opening of the account. As per the Public Provident Fund scheme rules, the date of calculation of PPF maturity is taken from the end of the financial year in which the deposit was made. So, if a person opens a PPF account on 17th September 2020, the PPF account will mature on 1st April 2036. Photo: Pixabay
Trick in PPF lump sum investment
As the PPF scheme lock-in period starts from the end of the financial year in which the deposit was made, if an investor makes an annual contribution it will be a total of 16, and not 15, contributions during the tenure of the scheme. Photo: Pixabay
Strategy for PPF lump sum investor
In case of lump sum annual PPF investment, it is advisable to do it before April 5 of every financial year. This is because even though the interest is credited on March 31 of every financial year, one will be able to get PPF rate of interest on one's account for the entire year. Photo: Pixabay
PPF account is free from court decree
A PPF account is meant for financial emergencies as PPF accounts cannot be attached by a person or entity to pay off any debt or liability. Further, even a court order or decree cannot make a person liable to pay off his debts using money from his PPF account. So, one must have a PPF account, who knows what lies in the future! Photo: PTI