Why PPF (Public Provident Fund) is important in your portfolio?

Now that you have a taste of how much your money can grow in the next 15 years with PPF let’s see some key features of it:

1. Completely Tax Free: With PPF you will get the benefit of Tax Exemption during investment, accrual and withdrawal which means:
   There will be no tax on the amount of investment you do.
   There will be no tax on the amount of interest that your money earns every year.
   And there will be no tax at the time of withdrawal during maturity.
2. Lock-In Period: There is a fixed 15-Year lock-in period on this investment before which the funds can’t be withdrawn completely. Premature withdrawal is allowed only incase of emergency. The investor have the option to extend the investment duration by a block of 5-Years.
3. Investment Policy: An investor can chose to invest between a minimum of Rs 500 and a maximum of Rs 1.5 lakhs annually. Investments can be made as a lumpsum or as a SIP. For SIP, there is a maximum of 12 installments allowed in a financial year. To avoid penalties the investor must invest the minimum amount every financial year.
4. Interes on PPF: Currently, the interest rate of PPF stands at 7.1% which is expected to grow in coming years. Govt. has the right to change the interest rate every quarter. The interest earned is credited to the investor’s account at the end of each Financial Year i.e. on March 30 or April 1. To maximize the interest on the investment it is recommended to invest on a PPF account before 5th of every month as the interest rate is calculated monthly and the interest is paid on the lowest amount on the PPF account after 5th of each month. 
   
5. Loan against the invested amount: Investors can take loan against the invested amount. Loan can only be taken from the starting of 3rd year to the ending of 6th year from the day of account opening.

How to open a PPF Account?

All the major banks offer opening of PPF Accounts. Some banks also allow investors to open account online.  It can also be opened in various Post Office present in the country.

Eligibility Criteria:

1. Only an Indian Citizen living in India can open the account which means NRIs are currently not allowed to have an account
2. The minimum age to open the PPF Account is at 18 Years. However minors can also open the account but in this case the account must be operated by their parents.

Documents Required while opening a PPF Account:

1. Identity Proof: You can submit any National ID as a proof such as Aadhar Card, PAN Card, Employee ID Card, Driving License etc.
2. Address Proof: This is also required to open an account. Proofs that are currently accepted are Aadhar Card, Driving License, Passport etc.
3. Signature Proof: If you are opening the account online, you have to sign on a blank paper , take a picture of it and upload it as the proof.

Banks allowing to open PPF accounts online: