The Concept of Public Provident Fund was introduced in the year 1968 in India with the motive to initiate and liquidate savings in the form of investment. Also termed as savings-cum-tax savings investment, it enables one to establish a collaborative medium while saving on annual taxes. For anyone who is looking for a secure investment option to save taxes and earn extra returns, opening a PPF account might be something you should consider.
Table of contents
What is a Public Provident Fund (PPF) Account?
A PPF account scheme is basically a long-term investment choice that comes with an attractive rate of interest. The earned interest and the returns are not taxable under the Income Tax. One has to open a PPF account under similar circumstances and this scheme. The amount deposited within a year will be claimed under section 80C deductions.
Features of a Public Provident Fund (PPF) Account
The key factors of a PPF account are mentioned below:
| Investment Limits: | Minimum limit is Rs 500 and the maximum ppf limit can go up to Rs 1.5 lakhs. |
| Nomination: | As a PPF Account holder, you can have a nominee when you open your account. |
| Tenure of the PPF: | Minimum tenure for a PPF is 15 years and can be extended in sets of five years. |
| Deposit Frequency: | In a tenure of 15 years, you can make deposits in your PPF account. |
| Risk Factors: | Being backed up by the government, this comes with lesser risks involved. |
Which Ministry is Responsible for Managing the Public Provident Fund (PPF)?
The Public Provident Fund (PPF) is a medium to instigate savings or savings plus tax in India. This savings instrument was introduced by the National Savings Institute of Finance in the year 1968, with the sole motive to summon small savings. This scheme introduced the concept of savings at reasonable return rates.
Being secured by the central government, this scheme comes with minimal risks and any balance in the account is not noted by attachment under any section or degree of the government savings bank act, 1873.
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All About PPF Contribution Limits
The minimum contribution for a PPF is usually Rs 500 but can be increased to 3 lakhs from the current limit of 1.5 lakhs.
Under section 80C, the maximum PPF limit per year has increased from 1.5 lakhs to 3 lakhs. PPF is basically a medium of saving that is availed by professionals or entrepreneurs.
How Contribution PPF Limits Affect Common People?
● Previously, the contribution ppf (Public Provident Fund) limit was set to 1.5 lakhs, but according to the 2022 budget, the union budget proposed an increment of Rs 1.5 lakhs, making it to 3 lakhs.
● This is one of the various suggestions made by the ICAI under section 80C pertaining to the Public Provident Fund.
● This is one of the various suggestions made by the ICAI under section 80C regarding the Public Provident Fund.
● Usually, PPF acts as a savings tool for professionals and entrepreneurs and helps them save on the contributing amount. The introduction of this increment of making the contribution limit to 3 lakhs has been done in order to introduce an efficient saving system for self-employed individuals.
● The employment requires 12% of their salary to be saved, contributing to the tax efficiency, which might leave them with a lesser gross amount. With this increment, the savings would no longer be a barrier.
What are Budget Expectations of PPF Limit?
The Finance minister, Nirmala Sitharaman, presented the budget 2022-23 in the parliament and with this, there has been an increase in the contribution limit from 1.5 lakhs to 3 lakhs.
What to Expect?
Under section 80C, the union budget 2022 would initiate a reduction in the surcharges and tax rates.
This would also include relief on the dividend taxation, increment in the housing loan repayment exemptions, rationalisation of capital expenditure across various assets, transaction taxes, eliminating GST on services that a common man avails, removal of securities, etc.
FAQs
Q. Is PPF available for five years?
The PPF (Public Provident Fund) comes with a minimum tenure of 15 years, which can be later extended in sets of five years according to your needs. The initial contributing amount is Rs 500, which reaches a maximum value of 1.5 lakhs for each financial year. Although, with the introduction of the recent budget, this maximum value has been increased to 3 lakhs.
Q. Can I have two Public Provident Fund Accounts?
As per the previous rule, one is not allowed to open two PPF accounts. Each individual must have a single PPF account. Just in case you knowingly or unknowingly opened more than one account, then the other account would be treated as an irregular account.
Q. Which Bank is best for opening a PPF account?
Opening a PPF () account via SBI can also be done online, which also makes the entire process easier to access.
Q. Which is better, NPS or PPF?
generates fixed returns in the category of Fixed Income. PPF investments come with a lower risk factor as compared to NPS, which usually depends on the market.
Wrapping Up
The Union Budget 2022-23 has introduced and quoted various aspects of the Indian industries and economy. The union budget was announced by the Finance Minister, Nirmala Sitharaman and also included information about PPF (Public Provident Fund) account holders. Listed above are the expectations that were laid out in the budget, along with the anticipated details.
