People who have a Public Provident Fund (PPF) account must make their contribution for the fiscal year 2023–24 by April 5 to get the most out of their investment.
The interest rate on the PPF balance will be decreased if a deposit for the current fiscal year is made after April 5. According to PPF plan rules, interest is computed based on the lowest balance in the PPF account at the end of the fifth day of the month and the end of the month. If an individual makes a lump sum investment, the money must be credited to the PPF account by April 5.
According to the PPF plan guidelines, interest is calculated monthly but credited at the end of the fiscal year. As a result, if a person makes monthly payments to a PPF account, make sure the money is credited to the account before the fifth of each month to receive more interest.
The Public Provident Fund Account (PPF) is adaptable, inexpensive, and accessible to all Indian citizens. A guardian can also choose PPF on behalf of a minor. The account gives a yearly compounded interest rate of 7.1%. PPF investments start as low as Rs. 500 and go as high as Rs. 1.5 lakh per fiscal year.
Although the maximum amount that can be contributed to the PPF each year is restricted to Rs.1.5 lakh, making a single contribution of this amount at the beginning of the financial year (on or before April 5th) will result in the interest being added for the entirety of the financial year.
It is worth noting that the PPF enjoys dual tax benefits, as both withdrawals and interest added to the money in the PPF accounts are tax-free under section 80C of the Income Tax Act.
FAQs
Making a deposit in your PPF account on or before the fifth of the month can help you earn higher interest. People who have a Public Provident Fund (PPF) account must make their contribution for the fiscal year 2023–24 by April 5 to get the most out of their investment.
How can I get maximum benefit from PPF? ›
How to Maximize PPF Returns? Invest before the 5th of every month. PPF interest is calculated on the lowest balance between the 5th and last day of every month. For instance, if you deposit Rs 10,000 on 2nd Jan and another Rs 10,000 on 15th Jan, the interest will only be calculated on Rs 10,000 and not Rs 20,000.
What is the maximum limit for PPF contribution? ›
PPF Account Deposit Limit
The PPF's highest limit is 1.5 lakh rupees, and the minimum amount to deposit in your account is Rs 500. You can easily make the deposit payment in your account for the year. However, you will only be able to make it up to 12 times in a year.
What is PPF contribution? ›
PPF is one investment vehicle that falls under the Exempt-Exempt-Exempt (EEE) category. This, in other words, means that all deposits made in the PPF are deductible under Section 80C of the Income Tax Act. However, it should be noted that the maximum contribution in PPF cannot exceed Rs.1.5 lakh in one financial year.
What happens if I don't pay PPF for 1 year? ›
As per the PPF rules 2019, a minimum deposit of Rs 500 must be made in a PPF account every financial year. If the minimum deposit is not made in the account, then the PPF account will become inactive. Once the PPF account becomes inactive, then loan and withdrawal facility are not available.
Is PPF good or bad? ›
PPF as a Pension Tool
As far as the different pension plans or annuity products are concerned, the pension income is taxed according to the income tax slab. But, in the case of PPF, there is no tax to be paid. Thereby, it can be considered better than other pension schemes/plans.
Is PPF a good investment? ›
Public Provident Fund (PPF) is considered a good investment scheme for those people who want to invest for a long time and are not ready to take any market-linked risk in terms of returns. PPF is a scheme in which, guaranteed returns are available. This scheme is for 15 years.
Can I deposit 5 lakhs in my PPF account? ›
You cannot deposit more than Rs. 1.5 lakhs in the PPF Account in any given financial year. The deposit frequency, however, is not limited. Earlier, the PPF account max deposit was twelve times in one financial year.
Can I deposit 2 times in PPF in a month? ›
Yes you can. Earlier, you could deposit funds in your PPF account only twelve times during a financial year. However, per the new PPF rules, there is no restriction on the number of deposits. You can deposit funds in multiples of Rs 50, but, per usual, your maximum annual deposits cannot exceed Rs 150,000.
Can NRI invest in PPF? ›
Yes, an NRI can have a PPF account in India. However, the PPF account must have been opened while the person was still a resident of India. An NRI can only have a PPF account if they opened it as an Indian resident and prior to becoming an NRI.
If you invest Rs. 5000 in PPF for 15 years at an interest rate of 7.1%, you will get Rs. 1,35,607 at maturity.
What are the disadvantages of PPF account? ›
The following are the disadvantages of the Public Provident Fund:
- Lock-in Period: One of the biggest disadvantages of PPF is its lock-in period of 15 years. ...
- Low Interest Rate: The PPF interest rates are subject to annual revisions by the government. ...
- Liquidity: PPF is not a liquid investment.
Public Provident Fund (PPF) news: Individuals who invest in PPF should always try to deposit the moneyb in their PPF account before or on the fifth of every month. This helps gain interest benefits for that month. Your money in a PPF account earns a 7.1% interest.
Can I deposit more than 1.5 lakh in PPF? ›
Can I pay more than 1.5 lakh in PPF? The maximum amount that you can invest in your PPF account in a financial year is Rs. 1.5 lakh. Any amount beyond that will not earn any earning interest and would not be eligible for deductions under Section 80C of the Income Tax Act, 1961.
How long does a PPF account last? ›
Maturity: A PPF account matures in 15 years, and you can extend it in blocks of 5 years each.
Can I do PPF for 10 years? ›
Long-Term Investment: PPF is a long-term investment scheme with a maturity period of 15 years, which can be extended in blocks of 5 years after maturity. Tax Benefits: Contributions made to a PPF account are eligible for tax deductions under Section 80C of the Income Tax Act in India.
Can we add more than 1.5 lakh in PPF? ›
Can I pay more than 1.5 lakh in PPF? The maximum amount that you can invest in your PPF account in a financial year is Rs. 1.5 lakh. Any amount beyond that will not earn any earning interest and would not be eligible for deductions under Section 80C of the Income Tax Act, 1961.
How much is 1.5 lakhs in PPF for 15 years? ›
This is calculated at the current interest rate of 7.1%. Investing the maximum amount of Rs 1.5 lakh every year in a PPF account would build a corpus of Rs 40.68 lakh in 15 years. At the same time, opting for extensions, with or without contributions, can further lead to a rise in the maturity amount.
Is it better to invest lump sum or monthly in PPF? ›
On the other hand, when you invest the maximum deposit amount in a lump sum in the first month itself, you will stand to earn interest for all 12 months on ₹1.5 lakh. This is why it is advisable to invest the entire ₹1.5 lakh in your PPF on or before April 5.
