PPF is considered a safe investment and many people invest money in it. Please tell that PPF account is protected by the government, so there is no risk in investing here. Instead, you do not have to pledge anything and the interest rate is also low.
- February 26, 2021, 4:52 PM IST
Facility is available for taking loan
A major advantage of investing in a public provident fund account is that you can take a loan at the time of need. There is no need to pledge anything against this loan. Also it is quite easy to repay. Please tell that from the end of the year in which you opened your account on PPF, you can take a loan anytime after the next one year.
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Within the next five years from the year of opening of the PPF account, a loan can be taken on its basis. At the time the loan is being applied for, the loan can be taken up to 25 percent of the amount in the account during that time.
Know the interest rate of the loan
The central government revises the interest rate on PPF account every quarter. In case of other investments, the interest rate is always higher when invested in PPF. In this, you can take advantage of the loan in the third and sixth year by opening an account. The rate of interest usually ranges from 7 to 8 percent, which may increase or decrease slightly depending on the economic situation. Currently, the interest rate is 1 percent, which is compounded annually. This is more than the fixed deposits of many banks. There is a 15-year period for subscribers after which the amount under the tax exemption can be withdrawn. Subscribers also have the option to extend it for 5 more years. They can also choose whether to continue the contribution or not.
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Benefit is available in tax
Tax benefit is available under section 80C of the IT Act. A deduction of up to Rs 1.5 lakh can be taken on the amount invested in the scheme. Both the interest and maturity amount earned in PPF are tax deductible.
It is beneficial for them to invest in PPF: –
This can be beneficial for self-employed professionals and employees not covered by EPFO.
Those who do not have jobs or businesses, no organized structure. They can invest here.