What Is The Full Form Of PPF In Income Tax?
PPF full form in income tax is Public Provident Fund. It began in 1968, created by the Ministry of Finance’s National Savings Institute in India. It is a mode of government-aided money-saving that ensures a benefit for the saver by tax reduction. Safety and the addition of financial value are the advantages of it, which most people like.
Features and Benefits of PPF:
Any citizen of India can start a PPF account at most banks or post offices. You need to put in at least ₹500 a year but not more than ₹1,50,000. The interest rate per annum for the first quarter of the financial year 2024-25 is 7.1%, and this interest is also not liable for taxation. A PPF account lasts for 15 years, but you can choose to keep it for longer, in periods of 5 years.
Loan and Withdrawal Rules:
From the third to the sixth year of having the account, you can borrow money against what you’ve saved in PPF. You will only borrow up to 25% of the amount you had at the end of the second year before you ask for the loan. From the seventh year, in case you need to access some of your money, you will be allowed.
Limitations:
PPF is great for long-term savings but it has some downsides. But on the other side, there are a few cons attached to it: you have to leave your money in it for 15 years, which is not feasible in case the money is required by you much before that. And yes, inflation is another issue with PPF.