The BuyT Desk
If you have been thinking about opening a Public Provident Fund(PPF) in a bank then you must hold an account in that bank. Nowadays banks have made it very easy to follow and track the account. Before we tell you how will you open the account lets understand how does PPF account work.
How PPF works?
A Public Provident Fund(PPF) is a saving cum investment account. It is like a fixed deposit with a lock-in of 15 years. You can make a payment of a minimum of Rs 500 and a maximum of up to Rs 1.5 lakh in a year. You earn interest on your PPF deposit. The interest on PPF is revised every quarter but interest is added on a monthly basis which gives the befit of compounding to the investor. The credited interest gets added to the principal and then interest is earned on the entire amount. At present, PPF is earning interest at 7.10% until March 2021.
Maturity & Tax Benefit of PPF
PPF matures only after 15 years but there are options when the partial withdrawal is allowed. There is the provision of premature closure too. One can close the PPF after 5 years of account opening on the grounds of a medical emergency. The PPF contribution is tax-free and can be claimed as a deduction under section 80C of the Income Tax Act. The amount received at the time of maturity of PPF is also tax-free and even the interest of PPF is tax exempted. The contribution made towards the PPF account of a spouse or a minor is also tax exempted but do keep in mind that you can’t get any exemption beyond the Rs 1.50 lakh limit of section 80C of the Income Tax Act.
Must-Have for opening a PPF account in a bank
PPF account can be opened at post office and banks. If you want to open a PPF account in a bank then this is what you must have.
You can either visit the bank branch or open an online PPF account by using the digital platform of the bank through Netbanking/ or the mobile app of your bank.
Most of the public banks such as State Bank of India & Punjab National Bank have both online and offline service of PPF account. Even the major private banks like ICICI bank, HDFC bank and Axis bank are giving you the facility of PPF account.
You must have a savings bank account with the respective bank and must activate internet banking if you are planning to open your PPF account online.
Your bank account must be linked to your Aadhar number. Your phone number liked to your Aadhar must be active so that you can reeve the authorisation OTP and instantly e-authorise.
You need to physically submit your KYC related document proof along with the filled PPF request form. You will get time to submit these documents.
Documents that should be ready
Identity Proof
PAN details
Aadhar number
Address proof
Passport-sized photograph
Salary slip
Hope we have simplified the steps for you. If you have been looking for along term investment that is safe, saves your tax and gives a return on your investment then PPF could be that answer.
