Public provident fund(PPF) is very popular among investors.
A public provident fund is the preferred tax-saving investment.
It is a great option for long-term goals.
Even it is helpful under section 80C for tax saving purposes.
Why PPF is the best ways to invest your money?
Here are some of the best reasons which makes PPF (Public Provident Fund) is the best tax saving schemes:
1. Income tax benefit
The Public Provident Fund is not only helpful for saving for long-term goals, but it is also useful for tax benefits.
PPF provides a triple tax benefit.
You will get a tax exemption at the time of investment.
PPF provides 1.5 deductions on the investment made while filing ITR every year.
According to the Income Tax Act 1961, it is beneficial under Section 80C.
You can withdraw at maturity which is also exempt from tax-free income.
2. Provide the highest interest rate for your invested money
Public Provident Fund provides the highest interest rate for your invested money.
PPF is offering 8.5% for the year 2020-2021.
The current interest rate for PPF is 7.1%.
Other savings schemes such as the National Savings Certificate offer 6.7% for a 5-year deposit.
Interest is low, while PPF is beneficial for floating rates.
If you have fixed your investment for a longer period. If the interest rate rises you can lose.
You cannot get a change where the interest rate is set for the entire period.
PPF gives floating interest rates which vary with time every quarter.
If the economy starts growing then the interest rate will also increase and it will give you higher returns.
The interest rate for PPF was less than 7% in July 1974.
3. Best investment for long term investment
By the way, the ppf account matures after 15 years.
It is up to you whether you can withdraw the money or close the amount or extend the time.
If you have invested some money like 50,000 every year, then after 15 years you can build around 14.6 lakhs.
The rate of interest will be fixed at 7.1%.
And if you extend it for more time, you can save money on long-term objectives.
4. Safest investment plan
Well, PPF convinced you to have safe investment plans.
PPF is one of the safest option interest plans.
It comes with the best premium.
Interest on FD is not exempt from tax.
PPF gives desired returns and stable income.
5. Uses of PPF
Like other investment schemes PPF(Public Provident Fund) also come up with many investment plans with different uses such as children’s education fees, home loans, principal, term insurance, etc. And it is tax-free defensively.