Public Provident Fund (PPF) is a popular low-risk saving scheme run by the Government of India. Any Indian resident can start saving under the PPF scheme and enjoy returns with an investment of just ₹500 per year. The interest is set and paid by the government and the current rate is set at 7.1% for the first quarter of the financial year 2021-22.
Features of PPF
This is a long-term investment scheme and the invested sum cannot be withdrawn before the lock-in period which is a minimum of 15 years. This period is extendable by five more years after maturity. Nevertheless, premature withdrawals are allowed in some cases and are subject to certain clauses.
A maximum of ₹1.5 lakh can be invested in a financial year in lump sum or instalments. In addition, the investors enjoy tax benefits since the principal, maturity amount, and the interest earned on PPF is exempt from taxes as it comes under the EEE (exempt exempt exempt) category.
How to open PPF?
A PPF account can be opened with the post office or any bank that is authorised to open a PPF account. It is a simple procedure that requires filling a form provided by the opening authority and completing KYC (Know your customer) by providing supporting documents. It can also be opened online using one’s net banking portal. A nominal fee is charged to open the account.
Linking with Aadhaar
The government has mandated to link Aadhaar to PPF account at the time of opening it, to avail PPF’s benefits. Additionally, for all the current account holders new rules require to either provide the beneficiary’s Aadhaar number or deposit proof that they have enrolled for Aadhaar.
For linking PPF to Aadhaar, individuals can log on to the Employees' Provident Fund Organisation (EPFO) official website and complete the process online.
PPF is a low-risk investment that is quite popular in the country. It is suitable for investors with a low risk appetite. On the other hand, Aadhaar is one of the most important documents for the verification of identity that is used in India.
Thus, linking these two has been mandated by the government to curb fraudulent activities. To avail of the benefits of PPF individuals should get their Aadhaar issued if they do not already hold one.
