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Public Provident Fund Account (PPF ) is flexible, cheap and available for all Indian residents. A guardian can as well opt for PPF on behalf of a minor. The account offers a 7.1% interest rate that is compounded yearly. Investment in PPF can begin at a minimum of ₹500 and maximum up to ₹1.5 lakh in a financial year. The scheme offers various tax benefits as well. While, PPF is indeed a very secured, guaranteed returns and small savings investment. However, to earn more income, it is better to deposit before the 5th of every month. Currently, the next best timeframe for depositing in PPF would be between April 1-5.
The scheme can be opened across India either at Post Office or Bank.
As per the Finance Ministry guidelines, interest in PPF accounts is calculated for the calendar month on the lowest balance in the account between the close of the fifth day and the end of the month.
Further, interest on the PPF balance is calculated every month but becomes due at the end of a financial year. Simply put, interest shall be credited to the account at the end of each FY where the account stands at the end of FY.
That means, to earn the maximum amount of interest, it is better to invest in PPF account before April 5. Even for monthly investments, it's better to deposit your money in a PPF account before the fifth of every month since interests are calculated on the fifth of every month on the balance amount.
So by depositing between the 1st to 5th of every month in PPF, the account holder gets an opportunity to maximize its income. In case, investment is done through cheques then one must ensure that it is done in a way that it gets cleared before the 5th of a month.
Notably, interest earned on PPF accounts is also tax-free under the Income Tax Act. Further, deposits qualify for a ₹1.5 lakh tax benefit under section 80c of the IT Act.
Under PPF, the amount can be deposited in any number of installments in an FY in multiple of ₹50 and maximum up to ₹1.50 lakh.
PPF also has a loan facility. The loan can be availed after the expiry of one year of the PPF account from the end of the FY in which the initial subscription was made.
The PPF account has a maturity period of 15 years. An account holder can extend his or her PPF for a further block of 5 years and so on (within one year of maturity) by submitting the prescribed extension form at the concerned Post Office.
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