The Public Provident Fund (PPF) is one of the most popular savings schemes in the country. Most people invest in it to save taxes. However, it’s a mistake to think of it solely as a government-guaranteed tax-saving scheme. It’s also an easy way to build substantial savings over the long term and earn tax-free returns. However, many investors overlook a small detail that could reduce their interest earnings.

Why is the 5th of every month important?

PPF interest is calculated based on the lowest balance in the account between the 5th of each month and the last day of the month. Therefore, if you deposit money on or before the 5th of a month, interest starts accruing from that month. However, if the deposit is made after the 5th, interest accrues from the following month.

At first glance, this difference may seem small. But with a 15-year plan like the PPF, this small precaution can make a big difference. Over the long term, you earn higher interest and benefit better from compounding.

Higher returns on investment in April

A maximum of ₹1.5 lakh can be invested in PPF during a financial year. If an investor has sufficient funds, they can deposit the entire amount in April. By doing so, the entire amount earns interest throughout the year, increasing the overall return on the investment.

However, most working individuals find it more convenient to invest monthly. The most important thing for such investors is to deposit their installments before the 5th.

You make this mistake unknowingly

According to experts, many people deposit money after the 5th of each month, unknowingly reducing their returns. Some investors also forget the annual minimum investment requirement. Many people misunderstand that the PPF interest rate remains the same for the entire 15 years.

To avoid these mistakes, you can use features like auto-debit or standing instructions. This ensures timely investment and avoids interest loss.

Important rules of PPF

PPF is a long-term savings scheme. It has a lock-in period of 15 years, meaning you have to wait 15 years to fully withdraw your invested amount. However, partial withdrawals are available from the seventh financial year, subject to certain conditions.

The minimum annual deposit required for this scheme is Rs 500. The maximum investment allowed in a financial year is Rs 1.5 lakh.

Interest rates are not always the same

Currently, PPF offers an annual interest rate of 7.1 percent. However, this rate is not permanent. The government reviews it quarterly and may make changes if necessary. Therefore, the interest rate may increase or decrease in the coming years.

How much money can be made in 15 years?

Based on current interest rates, a person depositing Rs 5,000 every month for 15 years could have a tax-free corpus of around Rs 15,000-16,000 upon maturity. If the monthly investment is increased to Rs 10,000, this amount could reach over Rs 30,000.

Investors who invest the full limit of ₹1.5 lakh annually could have a corpus of over ₹40 lakh after 15 years. However, the actual return will also depend on future changes in interest rates.

Account can be continued even after 15 years

A key feature of PPF is that it’s not mandatory to close the account after the 15-year term is complete. Investors can extend the account in blocks of five years. They can either continue with new investments or continue earning interest on the balance in the account without making any additional investments.

This allows savings to grow over a longer period of time and the benefits of compounding continue to accrue over a longer period of time.

A reliable option amid market volatility

Today, investors have a wide variety of investment options available. Many of these options promise high returns, but they also carry high risks. The strength of PPF is its simplicity and stability.

It’s immune to daily market fluctuations. For those who invest regularly over a long period of time, it remains a reliable option for building substantial savings. Furthermore, the investment, interest, and maturity proceeds are all tax-free, further increasing its appeal.

The post Looking for higher returns on PPF? Investing with the due date in mind will yield higher returns. first appeared on Rightsofemployees.com.

PPF Rules : Facility to extend

The maturity period of Public Provident Fund (PPF) is 15 years, but even after this it can be extended. And this process can be repeated again and again. That is, you can extend it for 5-5 years.

If you extend the scheme after the maturity of 15 years, then after 15 years, you will continue to get 7.1 percent annual interest (PPF Interest Rate) on the closing balance. On the other hand, if you extend it with investment, then interest on interest will be added in the scheme in the same way as before maturity.

When you extend the scheme for 5 years without investment, you can withdraw any amount once in a year. But when you extend the account with investment, it is important to note here that you can withdraw only up to 60 percent of the amount once in a year.

Let us now understand the extension facility in PPF with an example.  

PPF: How much fund can be created on maturity of 15 years 

If you make maximum deposit in every financial year till maturity in PPF i.e. for 15 years, then a total fund of Rs 40,68,209 can be raised as per the current interest rate. 

Maximum deposit in a financial year: Rs 1.50 lakh
Interest rate: 7.1 per cent per annum
Total deposit in 15 years: Rs 22,50,000
Total fund after 15 years: Rs 40,68,209

PPF: How will be the monthly income

Here you ran the scheme for 15 years and created a fund of Rs 40,68,209. Now if you extend it for 5 years without investing anything, you will get 7.1 percent interest on the closing balance. At the same time, you can withdraw any amount at once in a year.

Now let’s assume that you plan to withdraw only the interest amount once in a year. Here you will get 7.1 percent annual interest on your closing balance. This will be Rs 2,88,843 in a year. You can withdraw this entire interest amount once in a year. If you divide it into 12 months, it will be Rs 24,000 per month. There will be no tax on this withdrawal. One thing is clear here that through PPF, tax free income of up to Rs 24,000 can be easily taken every month.

PPF: If you invest for 20 years 

Maximum deposit in a financial year: Rs 1.50 lakh
Interest rate: 7.1 per cent per annum
Total deposit in 15 years: Rs 22,50,000
Total deposit in 20 years: Rs 30,00,000 (Rs 1.50 lakh X 5 + Rs 22,50,000)
Total fund after 20 years: Rs 66,58,288 

How will be the monthly income after 20 years 

It is clear from the above calculation that by extending the PPF account for 5 years, you can create a fund of about Rs 66.50 lakh. Now if you extend it for 5 years without investing anything, you will get 7.1 percent interest on the closing balance. At the same time, you can withdraw any amount at once in a year.

Now let’s assume that you plan to withdraw only the interest amount once in a year. Here you will get 7.1 percent annual interest on your closing balance. This will be Rs 4,72,738 in a year. You can withdraw this entire interest amount once in a year. If you divide it into 12 months, it will be Rs 39,395 per month. At the same time, there will be no tax on this withdrawal.

How to open PPF account?

Any Indian citizen can open this account in Post Office Small Savings in his or his child’s name. Both offline and online processes are available for this. These are the documents required for this. 

KYC documents verifying a person’s identity, such as Aadhaar card, voter ID card, driving license, etc.

PAN card

Address Proof

Form for declaration of nominee

Passport size photo

The post PPF Extend Rules: What is the rule of extend in PPF, how to use it for regular income first appeared on Rightsofemployees.com.

PPF Extension Rules: Public Provident Fund (PPF) is considered a very good investment option. This is a government scheme on which guaranteed interest is available. Any Indian can invest in this scheme. PPF is a long term scheme, it matures in 15 years and has the benefit of compounding. In such a situation, a good fund can be generated through this.

This is the reason why despite having many investment options, a large section of people prefer to invest in it. At present 7.1 percent interest is being given on PPF. If you are also investing in this scheme and want to avail its benefits for more than 15 years, then you can get this scheme extended. But do you know how many times PPF extension can be done? If you have invested then you must know the answer to this-

Know how many times you can get extensions done

In case of PPF extension, the investor has two types of options – first, account extension with contribution and second, account extension without investment. If you want to get it extended while continuing the contribution, then you can get it done in a block of 5 years. With this, your account gets extended for 5 years at one go. You can get PPF extension done any number of times.

How will the extension be done with contribution?

After 15 years, if you want to continue the PPF account with contribution, then you will have to submit an application to the bank or post office where the account is maintained. You will have to give this application before completion of 1 year from the date of maturity and fill a form for extension. The form will be submitted in the same post office/bank branch where the PPF account has been opened. If you are not able to submit this form on time, you will not be able to contribute to your account.

How to get extension without contribution

If you do not want to make any investment in PPF account after 15 years, but want to take advantage of its interest, then you also get this option. For this it is not necessary for you to inform the bank or post office. If you do not withdraw the amount after maturity of 15 years, then this option comes into effect automatically. Its advantage is that whatever amount is deposited in your PPF account, you get interest on it as per the calculation of PPF and tax exemption is also applicable. Apart from this, you can withdraw any amount of money from this account anytime. If you want, you can withdraw the entire money also. In this you get the facility of FD and saving account..

ICICI Bank again revise interest rate on FD in April, check new rate here

The post PPF Extension Rules: How many times can you get extension of PPF? first appeared on Rightsofemployees.com.

Investing in PPF i.e. Public Provident Fund is a good investment option, but if you invest money wisely in it, then only you will get maximum benefit. For your information, let us tell you that if you are putting money in PPF every month, then deposit it at the beginning of the month by the 5th, so that you will get the interest for that month as per the PPF rules.

Why depositing money till 5th is beneficial

The simple answer is that interest is currently being paid on PPF at the rate of 7.1 per cent and it is decided on the minimum balance between the last date of the previous month and the fifth date of the new month. Interest is paid on the amount deposited in PPF accounts every month but the interest in the account is credited at the end of the financial year which is March 31 of every year. This interest is payable for that account only if the new amount is deposited in the account before the 5th of the month.

So investors can get the benefit of interest on interest only when the amount is deposited in the account by 5th date. If someone deposits money in the PPF account after the fifth of the month, then he will not be able to get the interest of the previous month and the interest of that month.

Understand it with example

Suppose there is Rs 1 lakh in a PPF account on 5 April 2022 and the investor of this account makes an additional investment of Rs 1.5 lakh on 6 April 2022. So according to the rules of PPF, investors will get interest only on the minimum balance from April 5, 2022 to April 30, 2022, which was Rs 1 lakh. This means that the investor will lose the interest of the investment of Rs 1.5 lakh for April 2022. This means that if the investor had deposited Rs 1.5 lakh in the PPF account by April 5, he would have got April interest on the entire investment of Rs 2.5 lakh.

Therefore, investors should invest with complete planning while putting money in PPF so that they can get maximum returns. They should take it as a rule to invest in PPF by the 5th day.

The post PPF Interest Rate Benefits: Invest in PPF till this date, you will get the benefit of getting more interest first appeared on Rightsofemployees.com.

As per the PPF rules, an investor can start investing in his PPF account with as little as Rs 100. Its account can be opened in the nearest bank or any post office. For information, let us tell you that if a person invests continuously in PPF, then he can become a millionaire till maturity. Let us know in detail about how this is possible.

Rules of PPF account

If you have a PPF account then you need to invest at least Rs 500 in it. The investment period in this scheme is 15 years. In this scheme, an earning person can deposit together in a financial year or invest a maximum of Rs 1.50 lakh in a year.

Benefits of PPF account

PPF account follows EEE rule. That is, if a person invests Rs 1.5 lakh in a year, then he gets tax exemption. Apart from this, tax exemption is also available on its maturity. In this scheme, interest is given at the rate of 1.7 percent on investment, which is available in three months. The maturity of PPF account is 15 years. But investors can continue with the PPF account without withdrawing on maturity. The investor has the option to extend his PPF account for another 5 years even after maturity. That is, if you deposit Rs 417 daily, you can create a big fund for yourself.

Know immediately how to get lakhs of funds

Explain that if you start investing in PPF account at the age of 30 and increase your PPF account three times, then in such a situation the account holder will be able to invest in PPF account for 30 years. Suppose the investor invests Rs 1.50 lakh every year in the PPF account, then the total interest earned after 30 years of investment will be around Rs 1.54 crore. This calculation has been done on the basis that investors will get interest at the rate of 7.10 percent.

The post PPF Account: Deposit Rs 417 daily in PPF account, after so many years you will get Rs 1.54 crore first appeared on Rightsofemployees.com.