Public Provident Fund Scheme
The Central Government has
established the Public Provident Fund for the benefit of
the general public to mobilize personal savings any
member of the public (whether a salaried employee or a
self-employed person) can participate in the fund by
opening an PPF a/c in a post office, any branch of State
Bank of India or its subsidiaries or in specified
nationalized bank. A PPF account can also be opened by
NRIs.
- A minimum of Rs 100 per year and a maximum of Rs
60,000 per annum can be deposited in this account.
- The PPF Account carries a compound interest at the
rate of 12 %, p.a.
- The accumulated sum is repayable after 15 year.
- Conditions apply to the withdrawal of money during
the period of 15 years. Withdrawal of money from the
PPF Account can be made only after the 5th year.
Thereafter for each subsequent year one single
withdrawal is permissible. The amount that can be
withdrawn cannot exceed half of the balance at the
end of the 4th year immediately before withdrawal or
at the end of the preceding year, whichever is
lower.
|
Year
|
Opening
Balance
(Rs)
|
Amt.
Invested
p.a. (Rs)
|
Total
(Rs)
|
Interest
12 % p.a.
(Rs)
|
Grand Total
(Rs)
|
|
( 1 )
|
( 2 )
|
( 3 )
|
( 4 )
[2 + 3]
|
( 5 )
[4 x 0.12]
|
( 6 )
[4 + 5]
|
|
1
|
0
|
10,000
|
10,000
|
1200
|
11200
|
|
2
|
11200
|
10,000
|
21200
|
2544
|
23744
|
|
3
|
23,744
|
10,000
|
33,744
|
4,049
|
37,793
|
|
15
|
3,62,797
|
10,000
|
3,72,797
|
44,736
|
4,17,533
|
|
20
|
7,10,524
|
10,000
|
720524
|
86463
|
8,06,987
|
An investment of Rs 10,000 every year
for the next 15 years, is made in the PPF account, it
will mature after 15 years at Rs 4,17,533, 41.75 times.
The Annual Investment.
In simple terms a total investment of Rs 1,50,000,
i.e. Rs 10,000 every year for the next 15 years, yields
Rs 4,17,533, which is about 3 times the total amount
invested by the investor over the period of 15 years.
If the individual chooses to continue
the account for another 5 year beyond the required 15
year period then the maturity amount will be Rs 8,06,987
Note
- Interest is totally exempt from income-tax under
section 10 (15)(i) of the Income Tax Act, 1961.
- A PPF Account can be opened for a minor
son/daughter and spouse; amount deposited.
- An individual falling in the high income bracket
can deposit a maximum of Rs 60,000
- Section 88 confers tax rebate at 20 pc of one's
contribution to various specified investments, PPF
being one of them.
- There is no tax liability at the time of
withdrawal.
- The account holder may opt for continuing the
account for a further block period of 5 yrs at a
time (obviously he / she will need to continue to
deposit money every year for these five years also).
- Finally, the balance in the PPF account cannot be
attached even under decree of court.
|
