Punjab National Bank, the country’s second-largest state-owned run bank, states that Public Provident Fund (PPF) is one of the most popular investment and tax-saving options.
Punjab National Bank says that if you are worried about the future, do not panic at all, just open a new account to get the attractive interest and get tax-free returns.
Let’s know everything related to it:-
What is PPF Scheme?
The Punjab National Bank PPF account is for individuals who wish to deposit their funds into the government-backed Public Provident Fund (PPF).
Public Provident Fund (PPF) is a scheme run by the central government of India. You can take it as needed. It is not mandatory.
This scheme is optional. If needed, you can open a PPF account in any national bank or post office. For this, you do not even need to be an employee of the company.
A Public Provident Fund account is a financial account that has been made available to Indian citizens since its inception in 1968 through the provident fund scheme.
It offers dual benefits to the account holder. Along with attractive returns through interest rates, tax benefits can also be availed through this scheme.
The interest rates of the PPF account are-fixed every three months. From January 1, 2021, to March 31, 2021, PPF accounts will receive 7.1% interest.
Public Provident Fund account can be opened through any branch of Punjab National Bank
You can open your Public Provident Fund account by going to any branch of Punjab National Bank. Now the bank also provides this feature in its app. PPF is one of the most popular investments as well as tax saving options.
Through investment, not only can you get tax exemption according to section 80C of the Income Tax Act but also the interest on it and the amount collected at maturity are also tax-free.
A minimum of Rs. 500 per-year must be deposited into the PPF account. In a financial year (April to March), you can invest at least Rs 150,000.
If you also open an account in the name of yourself and your children, the maximum investment including all accounts will be only Rs 150,000.
Additional tax benefits besides Public Provident Fund you can get by opening a PPF account in the name of your spouse or children.
According to tax laws, if the money given to the spouse is invested in a gift, the investment income will be clubbed with the payee’s income.
Due to income tax exemption from PPF, this will not increase the tax liability of the contributor. Therefore, up to 150,000 rupees (1.5 lakh) can be-invested a year.
PPF account matures in 15 years
PPF account matures in 15 years. Once the account is matured, you can choose to withdraw the entire balance and close the account, or you can choose whether to extend the account for 5 years without any contract.
How many times can such an extension be done in a five-year block? That is, there is no limit. But the 15-year period does not mean that your funds will be locked for that many days. A 15-year period commences with the opening of the account. The lock-in gradually decreases. In the 14th year, however, it remains only one year.
If you opened a PPF account in 2006, then the lock-up period will end next year. However, even before it matures, in many cases, it allows withdrawals.
Can you withdraw money from your PNB account in an emergency?
You can withdraw your money in an emergency. After the sixth year, you can withdraw up to 50% of the remaining balance at the end of the fourth year.
You can take the loan on PPF account
You can take the loan at a 1% interest rate, and if the account is not completed for six years, then you can take a loan from three to six years. This loan can be taken for up to 25% of the balance until the end of the previous fiscal year.
The loan interest rate is 1%. Payment must be made within three years. Investors can no longer take out another loan until the loan is paid off.
It is mandatory to deposit at least 500 rupees in a year
In any one year, you can invest at least-500 rupees in PPF and more than 1.5 lakh rupees. For accounts over 15 years, a minimum investment of 500 rupees must be maintained.
If you do not make a minimum investment of 500- rupees, then your account statement will become inactive. To reactivate this dormant account, a fine of 50 rupees you have to be paid.
If you invest more than Rs 150,000 in any one year, even if the investment was made by mistake, you will not receive this additional interest.
PPF has compounded annually. However, its calculation is-performed once a month. The minimum balance from the 5th of the month to the last day of the month earns interest.
If you invest before the 5th, then as per contract, you will also receive some interest for that month. If you invest by cheque, please make sure to get the deposit three-four days before the deadline. If your bank is happy to deposit money into a PPF account.
The maximum limit of 150,000 rupees includes contributions to PPF accounts opened for minor children. This means that if the child opens a separate PPF account on his/her account, he cannot invest more than Rs 150,000 at the same time.
Interest is-calculated before the 5th of each month
According to Section 80C, there is a maximum exemption of up to 1.5 lakh-rupees for investing in PPF. There is no tax on the interest earned. However, it has to be told that all the information about the income tax return must be notified.
Withdrawals are also tax-free. It does not affect the person’s tax payable. The amount withdrawn at maturity is also tax-free.