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PPF scheme: Why it's still one of the best investment options

PPF scheme: Why it's still one of the best investment options

The PPF scheme offers various benefits and therefore, it is one of the most popular long-term and tax-saving schemes for depositors.

The PPF scheme offers various benefits and therefore, it is one of the most popular long-term and tax-saving schemes for depositors. The PPF scheme offers various benefits and therefore, it is one of the most popular long-term and tax-saving schemes for depositors.

When it comes to making a choice about suitable investment options for retirement planning, Public Provident Fund (PPF) still features in the top three choices among Indians, a recent survey has stated. The top two are equity mutual funds and the Employees Provident Fund (EPF). 
The findings of the Financial Freedom survey stated that though there is higher awareness about long-term investing, people are still unsure where to invest to plan a perfect retirement fund. The survey has shown an increased awareness about financial instruments among the 1,400 respondents in 2022, between 34 and 55 years.  

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The PPF scheme offers various benefits and therefore, it is one of the most popular long-term and tax-saving schemes for depositors. If one can make periodic investments for 15 to 25 years, the compounding interest can help one get a huge corpse of about Rs 1 crore. 

Prominent features 
The PPF interest rate gets revised every quarter. The current rate for this quarter is 7.1 per cent. 
It offers an Exempt-Exempt-Exempt (EEE) tax status for a period of 15 years. This means there will be no tax on the maturity amount. 
This is one of the main features of the scheme the final amount in products like NPS mutual funds is taxable. 
Investors who want to continue with their investments beyond 15 years can extend the account for a block of 5 years after maturity. 

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One can extend the period for one or more times following the 5-year block module. An investor can extend the period for 30 years if he/she opens the PPF account at the age of 25 years.  
One can avail of a loan against their saved amount in the third and sixth year of starting the account. 
The loan amount should be 25 per cent of the total saved corpus in the PPF account. The interest rate is 1% higher than the current government-set interest rate and has to be paid off in total (only the principal) within three years of the month the loan was approved.  
One can save taxes by investing in the PPF scheme as deposits qualify for deduction under Section 80-C of the IT Act. 
How is the interest calculated?  
According to the National Savings Institute, the interest is calculated on the lowest balance in the account between the 5th day and the last day of the month.
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Therefore, if an investor deposits his/her savings before the 5th of any month, he/she will earn the interest for that month. If someone is depositing the amount yearly, then he/she should deposit the savings before April 5 to earn the interest for that financial year.