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Public Provident Fund Scheme is the most popular savings scheme in India. It is framed and governed under Public Provident Fund Act (PPF), 1968. PPF is a government scheme where small amounts of funds can be an investment regularly. The aim of PPF is to provide retirement security for self-employed and workers from the unorganized sectors, hence PPF has a long lock-in period for investments. Following are the key highlights of PPF schemes
- Indian Citizen who is a Resident Indian can open PPF account. He might be salaried employee or self-employed or any other person.
- PPF account can be opened with the State Bank Of India, or its associates or any other Certified Nationalized Bank.
- PPF account is opened for a minimum period of 15 years. This tenure can be further extended for a minimum term of 5 years. Premature closure of account is allowed in certain cases after completion of 5 years.
- In a financial year, an investor can deposit minimum of Rs. 500 and maximum of Rs. 1,50,000/- in their PPF account.
- Government pays yearly interest on the balance in the PPF account. Interest earned in the PPF account can only be redeemed after maturity.
- Interest received from PPF investments is Tax Free.
- Deduction U/s 80C of Income Tax is available for the amount invested in PPF.
- Amount in PPF can be withdrawn from the 7th year onwards. This withdrawal amount is restricted to 50% of the previous years balance.
- Loan against the balance in PPF account can be availed after three years. Maximum of 25% of the balance in the PPF account is made available as the loan amount.
- Amount received at the time of maturity is completely tax-free.
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