Public Provident Fund (PPF) is a system of the Central Government, written under the PPF Act of 1968. Shortly, PPF is backed by the government and is a long-term small economies plan which was originally begun by the Government to render retirement protection to self-employed people and operators in the unorganized division. Now, PPF is each Indian citizens’ favourite investment promenade. You can use a PPF calculator to easily know about the contributions of employee and employers.
Accordingly, if you have to play safe, making a generous tax-free allowance of return, using tax advantage, then PPF is the right option for you. The contributions which are made to the PPF account will be having an interest which is free of tax, and all the maturity returns are excluded from income-tax. However, when you take up investment for the long term horizon, it can assist you at the time of retirement.
Know about the 10 basics and features of PPF Account
- PPF stands for Public Provident Fund.
- You can open a PPF account in any post office or national bank branches.
- To apply you have to complete a duly filled registration form, identity proof, residence proof and photograph.
- The investment limit is Rs 500 and the maximum limit is Rs 1.5 Lakhs in each financial year.
- The invested money is blocked for two years.
- You can withdraw part of PPF after the passing of five financial years.
- There are a lot of tax benefits.
- The rate of interest depends upon the current market scenario.
- You can also get a loan against your PPF.
- On maturity, you can close the account or start with a new set of contributions.
Major features of the PPF Scheme
- The eligibility criteria is that the Applicant must be a resident of India.
- Hindu Undivided Family (HUF’s), Non-Resident Indians (NRI’s), and Foreign Origin cannot invest in PPF.
- There is no age specification, minor allowed via guardian.
- You can open the PPF account at any post office.
- The mode of payments is Cash, Crossed Cheque, Pay Order, Demand Draft, Online Transfer.
- There is the facility of Nomination.
With all the above-mentioned information, you must also know that the interest rate calculated in the PPF has a benchmark. It is against the 10-year G-Sec yield, which is higher than the average yield by 0.25%.
Tax Benefits
To reemphasise, contributions into the PPF account are deducted under Section 80C of the Income Tax Act, 1961. It is subject to the highest permitted border of Rs 1,50,000 in one fiscal year. Furthermore, the earning interest on the investment is effectively excluded from tax. Therefore, that turns around to be the return of 7.80% p.a. and it is tax-free. Similarly, the process of maturity which is proceeding are exempted from tax.
PPF Calculator
Employees should be aware of the PPF calculator. It is a tool which helps to estimate the returns on the contributions in the PPF account. This tool is going to facilitate you to make smarter choices and also offer plans regarding tax saving. It will determine profits for your contributions within a fraction of second. You have to provide a few details like the amount of investment, instalments number, and so on. A PPF calculator estimates interests along with the allowable fund retraction boundary and desirable loan upon the PPF account.
Considering the funds you drop in a PPF account is barred for 15 years with partial removal ability following some requirements, it is desirable to produce an assessment on the growth of your fund. For any general PPF calculator, you will have two choices. Either select fixed investments or variable contributions with respect to 15 years. According to the financial plan, you will be able to determine the choice.
Benefits of PPF Calculator
By now, you have already come what is a PPF calculator. Let’s talk about the benefits.
- It helps to calculate fixed as well as variable investment.
- Permissible retraction limit within the span of 15 years.
- Estimates the conceivable loan amount you can get on your PPF account.
When the PPF account matures, you will have three different choices. One is the withdrawal of the maturity amount. Two, extend the account on a 5-year basis depositing fresh investments. Third, extend the account without any fresh additions. All the funds from the PPF can be utilised to achieve goals of life, retirement expenses, and education of children. The facility for taking a loan is also available for emergency situations.