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The Public Provident Fund (PPF) is one of the most popular long-term investment avenues in India. This government-backed scheme comes loaded with features that make it an attractive tax-saving cum wealth creation tool. Let’s examine why PPF deserves a place in your investment portfolio.
Investment Limit and Tenure
You can invest between INR 500 to INR 1.5 lakh in your PPF account annually. The minimum tenure is 15 years, extendable in blocks of 5 years thereafter. This sufficiently long duration allows your money to grow steadily.
Triple Tax Benefits
A key highlight of PPF is the Exempt-Exempt-Exempt (EEE) status, whereby the principal invested, accrued interest and maturity benefits are tax-free under Section 80C. This offers superior tax optimization opportunities.
Decent Interest Rates
Backed by government guarantee, PPF currently offers a stable 7.1% interest rate annually. While market-linked investments may offer higher returns, they also come with higher risk.
Other Benefits
PPF accounts allow partial withdrawals after 5 years and one withdrawal per financial year subsequently. It helps address interim liquidity needs. Also, it is one of the few debt products to offer guaranteed returns irrespective of market volatility.
Hence, if you seek a low-risk, tax-saving long term investment, PPF merits consideration. You can open an account easily by submitting the required documents to your chosen bank.