PPF or Public Provident Fund is scheme backed by Government of India introduced by National Savings Institute of the Ministry of Finance in 1968. If you are confused between investing in PPF and Bank Deposits, we suggest you to invest in PPF. Why? Here are some pretty good reasons:
- Interest Rates
The interest rates in Public Provident Funds are much better than that of any bank in India. PPF currently is giving the interest rate of 7.90% which is better than any Bank Deposit offer. Though the PPF interest rates are revised quarterly, they stay better than that of bank deposits.
- Tax Free Interest
While in banks, the deposits are fully taxable, the interest rates on PPF are tax free. It has just one limit, that an individual can only place maximum Rs 1.5 lakh in a PPF every year. Deposit amount can be low as Rs 500 and max Rs 1,50,000 in a financial year.
- Did You Know About Sec 80C Tax Benefit?
PPF users get tax benefit if they invest up to Rs 1,50,000 under the Sec 80C. Under this, one can save Rs 50,000 in the highest tax bracket, Rs 30,000 in 20 per cent tax bracket and Rs 15,000 in the 10% tax bracket. This is not offered by any bank until and unless it’s a tax saving deposit.
- A Good ‘Forced Saving’ For Retirement
PPF is a good long term investment for 15 years. It’s kind of a forced saving but in a good manner as it helps one to save for the future. Partial withdrawal facility starts from 7th financial year, building a solid retirement fund. This isn’t like any bank deposit. The only issue with PPF is its long tenure, but the wait is worth it!
Read also: Here Are 7 Financial Tips Everyone Should Know
- It’s No Harm
Even after providing all such advantages to the customers, PPF is no harm as it still is best with service. Now even banks are helping to create a PPF that means no running to the post offices to get an account. Online payment and transfers are also adding to the services provided under PPF investment. Thus it can be clearly said that PPF is a better option for investment.
