Financial year 2012-13 is moving towards its end and this is the time when most of the tax payers think of investing in different tax saving instruments to save tax. Tax saving instruments are those investment schemes which offers tax deduction under income tax act 1961. Although there are number of tax saving instruments available in the market like ELSS, PPF, NSC, Tax Saving FD’s etc. But choosing the right tax saving instrument which will give good returns while saving tax is important for a tax payer.
Here will be discussing a tax saving investment which offers tax free and risk free returns on the amount invested. So if need assured returns with safety and you can invest money for a longer period of time then you should consider investing in PPF. Public Provident Fund (PPF) is a government run saving cum tax saving scheme . Being a debt product, PPF offers guarantee of principal & assured returns on investment.
Features Of PPF
Tax Free: The investment made under PPF gives tax exemption under section 80C. Withdrawal from PPF, both principal as well as interest earned is tax free in the hands of investor.
Debt Related Instrument : PPF is a best debt related instrument which can fit in all types of investors portfolio.
The other debt related instruments are ELSS and NSC :-
What Is The Difference Between PPF and NSC Or PPF and ELSS?
Risk Free : Being a government running investment scheme, it is considered to be risk free as compare to other investment schemes available in the market.
Returns On Investment: The current rate of interest on PPF scheme is 8.8% for the FY 2012-13 which is tax free. So the returns on investment in PPF are quite decent.
Interest Rate : Government revises the rate of interest on PPF scheme every year in the month of march or April which remains fix for that particular financial year.
Investment Amount : The minimum amount of investment required every year is Rs 500 p.a which can go upto Rs 1 lakh p.a i.e the maximum investment amount allowed under PPF in India.
Tenure : The maturity period of PPF investment is 15 years which actually comes out to be 16 years so the investment made in PPF remain locked for 16 years.
What To Do At The Time Of Maturity Of Your PPF Account?
Liquidity : Being a long term investment investor will not enjoy the benefit of much liquidity in this investment. Although loan and pre-maturity withdrawals are allowed but with some restrictions.
For More details like Where to Open PPF Account?, Eligibility, How To Open PPF Account?, Loan On PPF Account, Pre-Mature Withdrawal From PPAF Account etc. check the link below.
PPF Account : One can open a PPF account with Rs 100 either at SBI, ICICI, Post office or designated nationalized bank branch in India like PNB bank branches.
PPF Account Transfer : Account holder can transfer his/ her PPF account from one bank to another or from post office to a bank. Some investors transfer there PPF account to take the benefits of online facilities which are available in few banks like ICICI bank.