Individuals can deposit amounts ranging from Rs 500 to Rs 1.5 lakh per financial year. After 15 years, the PPF account can be extended in blocks of 5 years. Its returns based on compound interest make it an attractive investment option for conservative investors.
What is the latest interest rate of PPF?
PPF Interest Rate It is determined by the Government of India and is subject to quarterly adjustments. As per the latest update for July-September 2024, the PPF interest rate is 7.1% per annum, compounded annually. Small Savings Schemes All forecasts for the July-September 2024 quarter are unchanged.
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PPF: Importance of timely deposits
Interest on PPF is calculated on a monthly basis. The balances on the 5th and last date of the month are compared and the lower balance is taken into account for calculating returns. Say, if your account had a balance of Rs 5,000 and Rs 1,000 on June 5 and June 30, the latter balance will be taken into account while calculating returns for the month of June, says a report by ET.
Therefore, depositing contributions by the 5th of every month maximizes returns, if deposited on a yearly basis.
What is the eligibility to open a PPF account? What is for NRI?
PPF accounts cannot be opened by Hindu Undivided Families (HUFs), trusts or Non-Resident Indians (NRIs).
If a resident becomes a non-resident Indian (NRI) during the maturity period of the PPF scheme, they can continue to contribute till maturity, but only on a non-repatriable basis. That is, funds held in a PPF account cannot be transferred abroad or repatriated; they must remain within India.
How are PPF returns taxed?
PPF falls under the exempt-exempt-exempt (EEE) category, which means that deposits, interest income and maturity proceeds are tax-free. Investors can claim a deduction of up to Rs 1.5 lakh annually under Section 80C of the Income Tax Act. Interest earned on PPF is also exempt from tax under Section 10 of the Act.
Tax benefits under PPF can be claimed while filing annual Income Tax Return (ITR) along with proof of investment documents.