PPF Interest Rate – Check latest Interest Rates of PPF 2018

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PPF is the acronym for ‘Public Provident Fund’. PPF is a type of saving cum tax saving instrument used by the general public of India. First introduced in 1986 by the National Savings Institute of the Ministry of Finance, this concept had aim and goal to mobilize small saving amounts by suggesting reasonable returns produced by investment along with the prospect of tax benefits. Any and all individuals who are resident citizens of India are completely eligible to have an account opened on their name under the public provident fund and can enjoy the benefits of tax-free returns.

The Public Provident Fund, often abbreviated as PPF, is one of the most sought after scheme for tax-saving. PPF can be a good choice of investment for retirement planning, but a lot of people treat it as simply a tool to save tax. Until the department of accounts sends you a reminder to furnish documents of tax-saving, you do not think much about it.

PPF Interest Rate

As of now the current PPF interest rate for the quarter October to December 2018 is 8% which is compounded annually. Before this, the interest rate was 7.6%. The PPF interest rate is set every year by the ministry of finance and is paid each year on 31st March. The PPF interest is calculated by the lowest balance between the end of the fifth and the last day of every month.

The PPF rate of interest that is payable on the PPF balance is subject to change every quarter. In the last decade, it has been pragmatic that the PPF rate of interest has varied; however, it has the chance to remain stable and was expected to fall slightly for the Union Budget of 2016. While the interest rate was 8.7 percent in fiscal year: 2015-2016 was slit to 8.1 percent in the fiscal year 2016-2017. The interest rates in some past years have been as under:

PPF Interest Rate 2011 to 2018

Financial Year

PPF Interest Rate(Yearly)

December 1, 2011-March 31, 2012

8.60%

April 1, 2012-March 31, 2013

8.80%

April 1, 2013-March 31, 2014

8.70%

April 1, 2014-March 31, 2015

8.70%

April 1, 2015-March 31, 2016

8.70%

April 1, 2016-September 30, 2017

8.10%

October 1, 2017-March 31, 2017

8.00%

April 1, 2017-June 30, 2017

7.90%

July 1, 2017-December 31, 2017

7.80%

January 1, 2018 onwards

7.60%

Benefits of PPF as a Tax Saving Instrument

A PPF is such a scheme that falls under and EEE category or Exempt-Exempt-Exempt category. This means that any deposits made under a PPF scheme are deductable under Section 80C of the Income Tax Act. Also, the entire accumulated amount including the interest is completely free of tax charges at the time of withdrawal. PPF accounts have a maximum limit of rupees one lakh fifty thousand each year. As per Section 80C of the Income Tax Act, the maximum deduction amount is 1.5 lakhs per year which is inclusive of all instruments of investments. This means that all deposits made to your PPF account can be considered as deductions under the same section of the same act.
A PPF account cannot be closed before the completion of its maturity period just like a fixed bank account even though the amount can be transferred between different designated accounts but can never be closed before the completion of the tenure. A PPF account can only be closed prematurely in the event of the death or demise of the account holder. Then in such a situation, the nominee mentioned in the file of the account holder can choose whether or not to close the PPF prematurely or let it reach its maturity period. 

Tips to make the most of your PPF Account

Those who have a PPF account can make the most of it by saving a lot on tax and having great prospects thanks to the high PPF interest rate of 8%. Since a PPF account cannot be close before its maturity period is complete, it acts as a great way to increase overall saving in general too. PPF interest rates provide on the best options for taxpayers when it comes to saving lump sum amounts on tax. Many already know about the benefits brought about by PPF but hesitate in taking advantage of them due to the extensively long lock-in period. 15 years might seem too long a period, but if methodically and carefully planned out, the investments made along with the PPF interest rate can act as a booster for extracting as much benefit as possible. Here are a few simple tips which will help any taxpayer make the most out of their PPF:

  • Open and early PPF account: opening a PPF account early o can prove to be highly beneficial. Instead of procrastinating and finding the absolute perfect scheme, investing in a PPF early on will help you make the most of the early time. This will help you bank on the PPF interest rate and not waste time in choosing the small formalities thus making the most out of the fund. This will help you reach the time of maturity faster and will be able to withdraw emergency money if it is required in the future as the minimum 7 year time limit for emergency withdrawal will have passed more quickly.
  • Monthly investment in the PPF account: to keep a PPF account active, a small amount of rupees 500 each year is enough to do so. It is not compulsory to invest each month. But, in order to make the most of the PPF interest rate, masking sizeable and comfortable investments into your PPF account can greatly benefit you in the long run. This is a great tip which leads to massive saving. Regular investment is the savings tip anyone can follow. You can even give your bank the instruction to make monthly transfers into your PPF account, and it will be done accordingly till the time of maturity. By giving a onetime instruction, you can save up on a lot and PPF interest rates being tax-free, when you finally close your account, you will be entitled to the entirety of the amount with no taxation charges of any kind. You can make monthly investments yourself or give your bank the instruction to do so on your behalf. By choosing the amount you invest each month, you can control the amount of expenditure and make the investments according to your comfort.
  • Invest in large lump sum amounts: apart from making regular monthly investments in your PPF account, it is also beneficial if you make large amounts of investments. Whenever you get some extra amount from work or some other sources, try putting some more into your PPF monthly investment. A little more than usual in the normal monthly investment will help you go a long way. By doing so, you will not feel the pinch of too much cash being locked away, and the total amount of maturity keeps on increasing exponentially. Also, due to lump sum investments on a monthly basis, the PPF interest rate will also help in generating more money for you to withdraw and consequently you will be able to save even more on tax.
    Parallel to this, it is important to ensure that you do not invest more money in your PPF account than it is allowed by the Income Tax Act, Section 80C. In a year, the maximum amount you can keep in your PPF account is rupees one lakh fifty thousand (rupees 1,50,000).
  • Careful deposition of monthly money: to make the most out of the PPF interest rate, here is a small trick. Deposit your monthly investments at the start of each Previously, banks used to calculate and give interest on the minimum balance between the 10th and the last day of each month. Now that old practice is left behind, and interest is given on a daily basis. Yet, PPF interest rate still follows the traditional method. So, the PPF account will only acknowledge the money deposited before the 5th of each month. So in order to get the PPF interest rate for the whole month, deposit your investments in your PPF account before the 5th of each month. The will allow you to take full advantage of your PPF interest rate and enable you to get more when you finally close your account after completion of the maturity time.
  • Using the beginning of the financial year to your advantage: often the long lock-in period of a PPF can be troublesome, to say the least. When the lock-in period of your investment is this long, even being able to open your account a complete year early with the full benefit is advantageous if not anything. In order to get the full benefit of the PPF interest rate, consider opening a PPF account at the beginning of a financial year. This can be done by opening a PPF account within the first 5 days of the financial year which if from 1st April to 5th April of each year. Opening an account before 5th April would cause the calculation of the PPF interest rate to be considered of the investment of the same year.
  • Loans from PPF: normally when people are in need for a loan, they tend to take a personal loan. But, if you have a PPF with a moderate amount in it, then you can, in fact, take a loan against that PPF instead of a personal loan. You may be wondering what benefit that could offer? The most captivating aspect of taking a loan against your PPF is the substantially low PPF loan interest rate. A general personal loan tends to have an interest rate that is between 13 to about 36%.
    For loans against provident funds in your own name, the PPF interest rate is much lower. The rate of interest tends to be only 2% more than your normal PPF interest rate that you get from your account. The roughly come to a minuscule 11%. This greatly helps when it comes to the repayment of the loan and helps keep you financially stable and viable more readily and easily for a longer period of time. It is always more beneficial to have a flexible loan system which is provided by PPF.
  • Online PPF option: this tip is more of a regularity check so that you do not miss a single moth on investment in order to make the most of your PPF interest rate. It is important to make continuous investments so that you can keep increasing your monetary pool and reap the maximum benefits of the PPF interest rates and save up on more tax at the time of maturity. Having online facilities to ensure regular updates on the monthly investment help maintaining the streak thus benefitting you in the long run. Not all banks provide online PPF facilities but some like SBI, ICICI, IDBI, and Allahabad bank offer online PPF services to help you get the most out of your PPF interest rate and help you save up on tax as much as possible. You can even transfer your funds into your PP through these online means. This spares you the hassle of having to go to the bank and do the formalities there physically. Instead, you can go about your monthly deposit from the comfort of your own home or from any place at any time.

PPF account is one of the most beneficial tax-saving facilities available to any taxpayers. With the long lock-in period as the only downside, this scheme offers many auxiliary benefits that compliment and assist the account holder. PPF interest rates are high and can be carefully used to get the maximum amount of returns when the lock-in period finally ends. By following the tips and tricks mentioned above, anyone can make the most out of a provident fund and have a more monetarily secure future without any worries.

Having a PPF can prove beneficial in the long run. Especially if you have a child, you can open a PPF in the name of your child and simply keep it active with a yearly deposit of rupees 500. Then you can let it be for 15 years. By that time, your child shall be grown up and can access the money generated without any hesitation. You can even continue to keep the amount in the fund for future use like health and future education. This time the lock-in period is only 5 years as the initial time of 15 years is already covered. As it is evident, public provident funds are a great tool for those who are looking for monetary security for the long run. Having a high PPF interest rate with tax saving clauses as per the Income Tax Act, Section 80 C, this is one of the best tools for everyday taxpayers and businessmen in general.

Those who wish to make the most of saving taxes can indulge in PPF and reap its benefits. It is easy and simple and can be done by any person residing in India with no restrictions.

How to Calculate PPF Account Interest Rate?

You can calculate the PPF interest rate on the least balance in the account between the 5th to the last day of each month. That’s why, in case you want to deposit a larger sum for any period of time of the year, you have to ensure that you invest on or prior to the 5th of a certain month, permitting yourself to produce interest for the whole of the month.

Advantages of PPF Account

Here are a few key advantages of having a PPF account for you:

  • If you make a deposit up to Rs. 1 lakh per annum in your PPF Account. The invested amount is liable to be exempted under Income Tax Act’s Section 80C. The contributions you make towards PPF account of your spouse or/and your children also qualifies for tax exemption under the Section 80C of the Income Tax Act, 1961.
  • The deduction on tax is also massive up to the interest generated on the PPF account that means the full balance of your PPF account is absolutely exempted from the tax, irrespective of the interest rate on PPF. This means that you do not have to pay any tax for return on investment in your PPF.
  • The balance sum in a PPF account can’t be notified of any claim in case of any debt or even a liability. Therefore, the sum of money that belongs to you for life and is obtainable to your loved ones after your demise.

How to find your Existing PPF Interest Rate?

The current interest for a fiscal year, usually from April 1 of the year to March 31 of the upcoming year is similar. It is accessible online and does not vary throughout the year. On the other hand, the more imperative number that may be the existing balance in your PPF account is a more vital number. Here is what you need to do in order to check that:

  • You can get hold of the bank or the post office branch to check the current PPF account’s status.
  • If the bank is offering online banking, you can link your PPF account to your current savings bank account. After getting merged both the accounts, you can access the accounts to check the interest rate on PPF interest rate and basic functions like making online payments for PPF loans and tracking the status of the account.

You should not get confused between Public Provident Fund (PPF) and Employees Provident Fund (EPF). The PPF and EPF are two different things. PPF is a personal savings account for an individual whose income has not been acquainted via a company or an organisation or anyone who is self-employed. Anyone already owning an EPF account can also open this savings investment account. Remember, the PPF interest rate is variable and so does the maturity amount.

 

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