Which Is The Best Tax-Exempt Instrument?


BANGALORE: Public Provident Fund is a Long Term Debt Scheme of the Government of India under the provision of Public Provident Fund Act, 1968 on which regular Interest is paid. The main objective of PPF is to provide old age income security to the employees of unorganized sector and self employed individuals. It is known to be the most tax efficient investment. For the debt or fixed income part of portfolio, PPF is a highly recommended option. PPF is very handy for those who want to enjoy safety, profitability and tax saving elements in their investments.

Let us look at the some of the basic facts relating to the scheme and also what makes it an extremely attractive investment option:

1. Investment Limit

An account holder needs to deposit a minimum 500 and up to maximum of 1,00,000 in a financial year. The depositor has flexibility and freedom for depositing any amount in a maximum of 12 installments in a financial year. In case of a minor’s account, the investment in the minor’s and guardian’s account together cannot exceed the maximum limit.

If for some reason, no minimum amount is deposited in the account in any year, the account gets discontinued. However, such a discontinued account can be revived by payment of the minimum deposit of 500 with penalty of 50 for each defaulted year.