Public Provident Fund (FPP) is a great investment opportunity that anyone can take advantage of right away. It is one of the best fixed income investments because it offers high returns, is risk free, and most importantly, is tax-free. State Bank of India (SBI), ICICI Bank and HDFC Bank, among others, offer online PPF account opening. In one fiscal year, you can make up to 12 transactions and transfer up to Rs. 1.5 lakh from a public provident fund account. Your transactions will be refused if you make more than 12 transfers. They are perfect for the nervous investor who wants to see their money grow over time. Additionally, PPF’s tax advantages on both expense and yield make it an irresistible choice.
Why should everyone have a PPF account?
The risk-free interest rate on PPF investments: With a program guaranteed by the government, you will benefit from an attractive interest rate of 7.1% per year. On an annual basis, the interest on a PPF is multiplied. Each year on March 31, you will receive your interest payment. Although the PPF has a lock-in period of 15 years, the funds in your account can be used in a number of ways. In the third and sixth years, you can take out a loan. You must repay the loan in 36 months at a rate 2% higher than the interest rate you are receiving. However, this balance cannot be withdrawn after the account has been active for 5 years. You can withdraw up to 50% of your total line of credit balance at the end of the fourth fiscal year or at the end of the previous year, whichever is lower.
How to transfer funds from different bank savings accounts to your PPF account?
Step 1: Log in to your net banking
Step 2: Go to the Money Transfers section
Step 3: Click on add a new third party beneficiary
Step 4: Enter your PPF account details such as For beneficiary name, use your exact name as in your public contingency fund
Step 5: Use your PPF number as the beneficiary account number.
Step 6: Enter the IFSC code of the PPF agency
Step 7: Click Confirm and Submit
You will be able to make a transfer easily after your account has been added as a third party beneficiary.
It should be very easy for you to transfer your money if your PPF account and your bank account are both at the same bank branch and are already linked.
If you want to regularly deposit your performance bonus or variable compensation into your PPF account, you can use the net banking channel to set up standing instructions for each transaction.
Individuals must go to their bank and issue them an ECS mandate, which allows them to transfer a fixed amount of money from their bank account to their PPF account. You won’t have to think about taking the time to make sure the money gets transferred to your PPF account if you use this option as the bank will do it for you.
PPF tax benefits
One of the best features of a PPF is its Tax Exemption, Exemption, and Exemption (EEA) status, making it one of the few investments in India that enjoys such a benefit. The amount you spend up to Rs. 150,000 is tax deductible, the interest you earn is tax free and the maturity amount you receive after 15 years is also tax free. Therefore, it is one of the most tax-efficient investments. If you are in the highest tax bracket, you are likely to pay a significant amount of tax. In reality, the after-tax returns of other instruments will drop sharply, making PPF a good investment choice compared to other choices in the same category.
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Article first published: Sunday 23 May 2021, 13:28 [IST]