Public Provident Fund interest rate reduced

Public Provident Fund interest rate reduced

The government of India recently reduced the interest rate on PPF investment from 8 to 7.9 per cent compounded annually. The reduction in rate will affect the final maturity amount an investor may be expecting after the completion of 15 year lock-in period.

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However, the revision of PPF and other small savings schemes’ interest rate is a routine process, done quarterly by the government. Also, 7.9 per cent per annum is still a handsomly high interest rate, compared to bank fixed deposits and other schemes. Not just this, the other benefits of PPF accounts continue to attract investors who want to save tax and get an assured return sans market risks. Here’s a look at the expected sum of money you may get by investing Rs 1000, Rs 2000, Rs 5000 and Rs 10000 per month in the PPF account offering 7.9 per cent interest:

Public Provident Fund Investment: Rs 1000/month

By investing Rs 1000 per month (or Rs 1000×12 = Rs 12000 per year), you can get up to Rs 3,50,000 upon maturity after 15 years.

Public Provident Fund Investment: Rs 2000/month

By investing Rs 2000 per month (or Rs 2000×12 = Rs 24000 per year), you can get up to Rs 7 lakh upon maturity after 15 years.

Public Provident Fund Investment: Rs 5000/month

By investing Rs 5000 per month (or Rs 5000×12 = Rs 60,000 per year), you can get up to Rs 17 lakh upon maturity after 15 years.

Public Provident Fund Investment: Rs 10000/month

By investing Rs 10,000 per month (or Rs 10,000×12 = Rs 1,20,000 per year), you can get up to Rs 35 lakh upon maturity after 15 years.

The above calculations clearly show that PPF is still a good option if you want to accumulate a lump sum amount over a long period. Not only this, PPP investment enjoys ‘Exempt, Exempt, Exempt’ status. This means there is no tax on the amount invested in PPF account, on the interest earned and on the amount withdrawn on maturity. You can open a PPF account with post office or commercial banks like SBI, HDFC Bank, ICICI bank etc……Read more>>

Source:-zeebiz

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