What is Public Provident Fund

An investor can deposit a maximum of Rs 1.5 lakh annually in the Public Provident Fund (PPF) scheme with an investment limit of 15 years. In return, the government gives interest at the rate of 7.1 percent to the investor. In this way, Rs 1.5 is deposited every year for 15 years, on which the annual interest rate is Rs 10,650. However, the current interest rate of 7.1 percent is expected to increase from July 2023.

Circular of the Ministry of Finance

In the circular issued on March 31, 2023, the Ministry of Finance has given a strict warning to the PPF account holders that the account holders should link their PPF account with their Aadhaar under any circumstances.

According to the ministry, if the PPF investor has opened the account before March 31, 2023 and has not submitted his Aadhaar number to the accounts office, then he should submit the Aadhaar number within six months from April 1, 2023. That is, PPF investors must link their account with Aadhaar by 30 September 2023. Account holders can also submit PAN along with Aadhaar.

What if PPF account is not linked with Aadhaar?

The Finance Ministry has made it clear in its circular that if the Aadhaar number is not submitted within the stipulated time in the post office where the PPF account is opened and the PPF account is not linked, then the account will be frozen, due to which the investor Many types of problems may have to be faced like-

1. The prescribed interest amount will not be credited to the investor’s PPF account.
2. The account holder will not be able to deposit money in his PPF account.
3. The maturity amount of PPF will not be transferred to the bank account specified by the investor.

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The amount deposited in the PPF account earns interest at a fixed rate, which is revised every quarter by the government. Right now its rate is 7.1 percent. However, here is a hitch in the interest calculation, which you can understand to increase your returns to some extent. Since, investment in PPF is fully protected by the government, there is no risk involved in investing in it. Invest between April 1-5, the money will increase, then the interest is calculated on the balance between the 1st to 5th of every month on the money deposited in the PPF account.

In such a situation, try to deposit money in the PPF account between the 1st to 5th date. Apart from this, if possible, instead of putting money in the account little by little throughout the year, deposit the money only between April 1-5, this will bring more interest to your account.

Benefits of Investing in PPF

• Triple Benefit: There is a triple benefit on investment in PPF. In this, tax benefit is available under section 80C on investment up to Rs 1.5 lakh. The interest earned on this investment is tax free and there is no tax to be paid on the maturity amount.

Option to become a millionaire: There is a lock-in of 15 years on investment in PPF. After 15 years, you can withdraw money from PPF account or increase it in blocks of 5-5 years. If you continue to invest in it for 25 years, then the maturity amount will exceed Rs 1 crore. For example, if the current rate of 7.1 per cent of PPF is maintained for the next 25 years, then after 25 years, an annual investment of Rs 1.5 lakh will yield a maturity amount of Rs 1.03 crore.

Loan facility: There is facility to take personal loan against PPF account. This benefit can be taken in the third and sixth year from the opening of the account. This is especially beneficial for those who want to apply for a short term loan and do not want to pledge any assets. There is also an advantage of taking loan benefit from PPF account that interest has to be paid at a lower rate than the loan taken from banks. In its repayment also, there is a facility to pay in lump sum or in installments.

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