For Indians looking for saving schemes when they retire, the two options available are the Public Provident Fund (PPF), and the Employee Provident Fund (EPF) also referred to as PF. One of the main benefits of these government-run schemes is that they are stable and ideal for those looking for long-term investment options. Here is what to know about these saving schemes.
What is PF?
This retirement saving scheme is compulsory for salaried employees at recognized organizations in India. The employee must contribute 12% of his/her monthly salary, with the employer also required to match the same. While an employee may opt to save a higher amount under the Voluntary Provident Fund options, the employer’s contribution will remain capped at the required 12%.
The employee may opt to withdraw the savings after retirement or be unemployed for more than 2 months. The scheme also allows employees to take a loan against their savings after being in the program for 5 years. The scheme also allows employees to transfer their savings accounts if they are employed elsewhere.
However, if one becomes a non-resident (NRI), they are no longer eligible to add to their PF account. Since it is automatic, account holders do not need to worry about making deposits, leaving them to concentrate on other activities such as concentrating on their productivity at work, looking at other investment opportunities, or even relaxing and playing their favorite games at a legit casino such as Comeon India in their free time among other things.
What is PPF?
This is a saving scheme that offers fixed returns for Indians looking to build a retirement savings plan independently. It was introduced to help Indians who are not employed to invest in the scheme. While the scheme is not available for non-resident Indians, those with existing accounts can retain them until the expiry tenure of 15 years.
All deposits and returns of a PPF account are exempted from being taxed. Currently, the interest rate stands at 7.1%, with the government reviewing them quarterly at its own discretion. It has a maximum duration of 15 years, but account holders can extend it by periods of 5 years.
Individuals can deposit a minimum of Rs.100, and up to a maximum of Rs.1.5 lakh in each financial year. Account-holders are also eligible to take loans against their savings between the 3rd and 5th financial year after opting into the scheme. Account-holders may make a partial withdrawal for emergency reasons after the completion of 5 years. The program also offers account holders the option to close their account for valid reasons after 5 years.
Why you should opt into a PPF?
While a PF is compulsory, opening a PPF is voluntary and has its own benefits. One of them is a stable retirement investment scheme supported by the government. This means you are assured of stable and guaranteed returns. This is ideal for those who want low-risk investment options or to diversify their investment portfolio since they are not dependent on how markets are trading. The government provides qualified individuals, with both online and offline registration options.
Taxability of interest on ppf
There are several tax benefits associated with PPF accounts. One such benefit is the deduction of interest paid on deposits made under the scheme. This means that the interest earned on your investments will not be taxed. Another advantage is that the money deposited in PPF accounts is exempt from taxes when withdrawn after retirement.
PPF Eligibility
In order to open an account with PPF, you need to be a resident of India. You also need to be between 18 years and 60 years of age. Additionally, you must not have any outstanding loans against your name.
PPF Calculator
You may be wondering what is the best way to invest your money in PPF. Well, you can use our PPF interest calculator to know how much you can earn over a period of years.
With the below PPF Interest calculator, you can easily calculate your PPF maturity value with the accumulated interest earned.
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