What is public provident fund scheme?


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Public Provident Fund Scheme : One of the most attractive investment avenues available in India, the Public Provident Fund (PPF) scheme has the following features:

  • Individuals and HUFs can participate in this scheme. A PPF account may be opened at any branch of State Bank of India or its subsidiaries or at specified branches of the other public sector banks.
  • Though the period of a PPF account is stated to be 15 years, the number of contributions has to be 16. This is because the 15 years period is calculated from the financial year following the date on which the account is opened. Thus, a PPF account matures on the first day of the 17th year.
  • The subscriber to a PPF account is required to make a minimum deposit of  100 per year. The maximum permissible deposit per year is  70,000.
  • Deposits in a PPF account can be deducted before computing the taxable income under Section 80 C.
  • PPF deposits currently earn a compound interest rate of 8.0 percent per annum, which is totally exempt from taxes. The interest, however, is accumulated in the PPF account and not paid annually to the subscriber.
  • The balance in a PPF account is fully exempt from wealth tax. Further, it is not subject to attachment under any order or decree of a court.

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