Interest on a Public Provident Fund (PPF) deposit is compounded on a quarterly basisPPF or Public Provident Fund is a government-run savings scheme available at designated branches of banks and post offices.
For the quarter ending December 31, investment in the 15-year Public Provident Fund account fetches interest at the rate of 7.9 per cent per annum.
Theinterest rates on small savings schemes such as Public Provident Fund are revised every quarter.
For the third quarter of financial year 2019-20, the interest rates on nine small savings schemes have been kept unchanged at existing levels, according to a Ministry of Finance notification.Here are six important things to know about the 15-year PPF account:PPF interest rateThe PPF interest rate is compounded on a quarterly basis.
For the quarter ending December 31, the interest rate is 7.9 per cent.Investment limitA minimum deposit of Rs 500 per financial year is required in order to invest in a PPF account.
The maximum sum allowed is Rs 1.5 lakh per financial year.
The deposit can be made in whole or in 12 instalments.Type of accountA PPF account can only be held by one person.
A joint account option is not available in PPF.Mode of paymentA PPF account in the post office can be opened against cash or cheque payment.
Lenders such as SBI and ICICI Bank also enable their customers to set up a PPF account through net banking.
( How To Set Up A PPF Account Through SBI Net Banking)Lock-in periodInvestment in a PPF account matures in 15 years.
Within one year from the end of this period, the account can be extended for another five years and so on.
A premature closure of account is not allowed before completion of the 15-year lock-in period.Income tax benefitWhile the amount deposited in the 15-year PPF account is eligible for deduction in taxable income under Section 80C of the Income Tax Act, the interest earned and maturity proceeds are tax-free.
In other words, the PPF investor is not required to bear any taxes on investment, accumulation as well as withdrawal.Get Breaking news, live coverage, and Latest News from India and around the world on TheIndianSubcontinent.com.
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