Retirement Planning: 10 things to know while opening a PPF account

By Navneet Dubey

Public Provident Fund (PPF) is considered as one of the best instruments for planning your retirement. It’s an instrument open for everyone to invest for their retirement. Even parents and guardians can open a PPF account for their children. Over the long period of accumulation that PPF allows one to build a good corpus since there is a compounding benefit.

Here are 10 important things which you should know while opening a PPF account:

=> Opening and shifting of a PPF account: Any citizen of India can open PPF account in their own name. It can be opened with any registered bank or a post office which one can transfer easily from one location to another.

=> One who cannot hold a PPF account: NRIs and HUFs cannot open a PPF account. However, in a scenario where if a resident becomes an NRI during the prescribed term, s/he may continue his account till its maturity on a non-repatriation basis. A joint account is also not allowed.

=> The minimum amount required to deposit in a year: Rs 500 is the minimum deposit required in a financial year and one can even increase thereafter. Maximum 12 installments can be made anytime during the financial year.

=> Interest is compounded: The annually compounded interest which is not paid out to you is calculated on the lowest balance existing from the 5th day till the last day of a month.

=> PPF offers guaranteed returns: PPF offer guaranteed returns, where the rates may keep on change from quarter to quarter as per the government rules. Currently, for the FY 2017-18, the interest rate on PPF stands at 7.8%.

=> Availability of the maturity proceeds: The account matures after the completion of 15 years. However, one withdrawal is allowed every year from the 7th financial year subjected to certain terms and conditions.

=> PPF account can be extended for a lifetime: One can further extend the account for a period of 5 years after completing the initial 15 years and the process can be followed any number of times.

=> Nominee to get the balance in uncertain events: One should mention a nominee while opening a PPF account. If not mentioned, the balance can be paid to the legal heir in order in the event of death.

=> Exempt-Exempt-Exempt (EEE) tax benefit: It means the contribution made for up to Rs 1.5 lakh under section 80C of I-T Act, the accumulated interest over time and the maturity proceeds are all tax exempt in the hands of investors.

=> The account is not subject to any decree of Court: All the money invested in a PPF account is totally safe that is it cannot be at any point be seized by a court order.  Simply, no authority can officially order to take over your account under any circumstances.

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