PPF Account – Best saving instrument for salaried person

PPF Account - dotnetetc.com

Introduction

A PPF account is the best saving scheme for salaried person. Government of India runs this scheme. Only Indian citizen can apply for this scheme. This is a save investment because it’s a government scheme. Indian government revises the interest rate of this scheme every quarter. This is a savings-cum-tax-saving scheme as the interest earned is tax free.

Benefits

  • The interest rate is high as compare to other saving schemes like bank deposit, FD etc.
  • In PPF  interest income is non taxable.
  • Investment made during the year can be used for tax exception under 80c.
  • One can start investment with min Rs 500/year to max Rs 1.5 lacs/year.
  • PPF account can be opened in any nationalised bank or in post office very easily.
  • You can take loan on the PPF account balance.
  • Interest is compounded annually.
  • You can transfer your PPF account from one bank to other if you want.
  • Partial withdrawal of money is possible after 5 years.
  • A guardian can open PPF account on behalf of a minor.

Drawbacks

  • A 15 year lock in period is there in PPF.
  • Equity related saving schemes like Mutual funds give more returns as compared to PPF.
  • A minimum Rs 500/year investment is mandatory.
  • Only one PPF Account is allowed for an individual.

How to open PPF account

To open  PPF account you can go to your bank or post office and fill the required account opening form. You have to submit an identification proof and an address proof.

Now a days banks are providing facility to apply for account opening online. You just have to fill the online form on their portal, take printout of the same and submit it to their nearest branch. After opening the account you will be given a passbook for your account.

You can also manage your PPF online from your banks portal. You can deposit money to the ppf account directly using net banking.

Conclusion

PPF account is the best saving option for non salaried and salaried individuals both. It is safe, high interest income generating  and tax free scheme. One should add this in their investment portfolio to create a balanced portfolio. It is a long term investment option which give  compounding interest income.

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