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The Public Provident Fund, also known as PPF, is one of the most risk-free savings/investment schemes in India that is backed by the Indian government. What makes the PPF so popular is the guaranteed returns and tax benefits that come along with it. However, it comes with a maturity period. But what if you don’t want to wait, or need the money for some emergency? In that case, PPF withdrawal before maturity is definitely possible.
First, let’s understand how a PPF account works.
A PPF account can be opened at a Bank or Post Office by any individual who wishes to invest and create long-term wealth for their future. Currently, this scheme comes with an interest rate of 7.10% per annum with effect from 01.04.2020.
A PPF account can be opened and maintained by investing a certain sum every year. Currently, the minimum amount needed to invest in PPF is ₹500, while the maximum limit per annum is ₹1.5 Lakh. Individuals can invest this sum in multiple instalments or all at once, as per their convenience.
However, if you’re wondering whether PPF is taxable, it’s not! It is completely tax-free. In fact, the amount you invest every year upto ₹1.5 Lakh is exempt from taxation under Sec 88 of the IT Act. Moreover, any interest that you earn in your PPF account is also tax-free. You also earn interest on interest, which yields more returns for the investor.
The PPF account comes with a maturity timeline of 15 years. This means you have to keep investing for the entire duration, whether it’s ₹500, ₹1.5 Lakh, or any amount in between. And once the maturity date is crossed, you can withdraw your entire corpus in one go. However, if you want to make a PPF withdrawal before maturity, you can do that as well.
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Image and article originally from www.bqprime.com. Read the original article here.