PPF Tax Saving: Public Provident Scheme is a popular investment medium to save tax. PPF is a long term savings cum investment product. To start with, you need to open a PPF account in the post office or designated branches of public and private sector banks.
Investment Scheme: Many investment schemes are going on in the country. In these schemes, many schemes are also being run by the government. At the same time, many people also invest money in PPF i.e. Public Provident Fund Scheme. Although people get many benefits in this scheme, but it is very important for people to know about some things. If there is no information about them, then people may have to face many problems.
Tax Exempt
Public Provident Scheme is a popular investment vehicle to save tax. PPF is a long term savings cum investment product. To start with, you need to open a PPF account in the post office or designated branches of public and private sector banks. Guaranteed interest rate is available on contribution to PPF account. You can claim tax exemption on these deposits under Section 80C up to Rs 1.5 lakh in a financial year.
Disadvantages of PPF scheme
At present, 7.1 percent interest is being provided by the government in this scheme. However, you should know about some important things regarding this scheme. Despite all the advantages of PPF, it is not completely free from criticism. Public Provident Fund also has some drawbacks which we cannot deny. Which is like this…
Interest Rate Fluctuating
interest rate can affect the maturity amount. If you notice, the interest rate of PPF scheme is not constant. It keeps on changing with time.
Long term
is 15 years long term. If you do not want to run any scheme for such a long time, then PPF is of no use to you.
Interest on minimum balance only
PPF interest rate is calculated on the lowest balance between the 5th and the last day of the month. For example, if you have Rs 20,000 in your PPF account and you deposit an additional amount of Rs 2000 after the 5th of the month, your interest will be calculated on Rs 20,000 and not Rs 22,000.
Lack of Liquidity
This is not the same as a mutual fund and hence there is a lack of liquidity. Your money gets locked up for years and it is not as easy as selling shares or units of mutual funds.
