You can earn interest by making annual or monthly deposits in the PPF account. To know more read these tips to earn maximum interest from your Public Provident Fund account.
Tips To Earn Maximum Interest From Your Public Provident Fund Account
PPF or Public Provident Fund is a scheme designed for people associated with various service sectors in India. Employees serving under this scheme get retirement benefits from their PPF account. Individuals can deposit a fixed amount annually in this account and enjoy its returns after a fixed maturity period. All citizens associated with the private and public sectors of India are eligible for this scheme, except those covered under the EPF scheme and NRI persons. The money deposited in PPF can be withdrawn by individuals as per their need or after retirement along with the total earned interest. Know the complete details about PPF Interest Rate 2022-23
How to Calculate PPF Interest? – PPF Interest Rate 2022-23
The interest rates of the Public Provident Fund is never the same. This interest rate is constantly changing depending on the government bond. PPF interest rate changes quarterly. Therefore, the interest is charged monthly on the money in this account. The amount deposited in the PPF account is reinvested along with the interest earned by it.
At the end of every financial year, the money in this account is calculated with interest earned and reinvested automatically. In this case, individuals withdraw money from the PPF account as per their requirement, or in many cases, they wait till the maturity period to earn more profit. The PPF interest rate for the third quarter of the current financial year 2022-23 i.e., October-December is 7.1%.
How to Use the PPF Interest Rate Calculator?
Interest is charged every month depending on the minimum level of money in the PPF account. In this case, interest is charged from the fifth day of every month to the last day of the month. So, an individual can earn interest for a particular month by investing before the fifth day of the month. If the person invests after the fifth day of the month, they will get interest on the invested money in the next month. Public Provident Fund.
Generally, investors are suggested to invest in PPF before the 5th of every month. The PPF Interest Calculator will provide a detailed result based on all this information about interest currently earned, the actual amount received and the potential amount receivable after maturity.
How to Maximise PPF Interest?
The interest earned on PPF deposits is less than the fixed deposit amount kept in banks. There are several strategies to increase earnings through money invested in PPF. Tips to earn maximum interest in PPF are discussed below.
Tip no. #1. Choosing the right time for monthly investment: Interest earned on the money deposited in the PPF account is calculated after the 5th of each month. Investors can invest in their PPF account before the 5th of the month. If the person invests before the 5th of the month, the person can also earn interest for the month invested. If the investment is made after the fifth day of the month, the investor does not get the interest for the month invested and gets the interest on the money in the following month.
Tip No. #2. Determining Annual Investment Period: The annual interest rate is charged on the minimum balance in the PPF account. So instead of a monthly investment, the investor can invest a lump sum amount earned by him at the beginning of the financial year. Since the financial year is from April to March, investors can invest a large amount from the 1st to the 5th of April. This will increase the minimum balance of the person’s PPF account and enable them to earn Maximum Interest in PPF.
Tip No. #3. Use digital banking in a PPF account: Maximum Interest in PPF profit is possible through monthly investment in a PPF account. In most cases, individuals have to visit the bank and invest in the PPF account at certain times of the month. As a result, investment is usually delayed or investment is skipped. Individuals can avoid problems related to investment skipping or delay by opening a PPF account in collaboration with an online service provider bank.
Tip No. #4. Distribute income in spouse’s name: An investor can open a PPF account in his spouse’s name. Gifted property or money is completely tax-free as per tax law. Through this, the investor can enjoy tax-free benefits of his PPF account as well as tax exemption on the gifted property.
Tip No. #5. Make Investment for Children: As per the Income Tax Act, a certain amount of money invested for minor children is treated as tax-free. An investor can invest up to Rs 70,000 in a PPF account for his children. The benefits of this investment can be used by the investor for the educational purpose of the child till the age of 18 years.
Tip No. #6. Withdraw as needed: Frequent withdrawals from the PPF account erode the minimum balance scale of that particular account. As a result, the investor may not earn the desired interest every month. An investor can use PPF only for emergencies to maintain balance on its minimum balance scale. This increases the possibility of earning maximum Interest in PPF profit during the interest calculation period of every month or every financial year.
How Much Tax Is Levied on PPF Returns?
Public Provident Fund is a post-retirement benefit scheme created and managed by the government. Attractive tax exemptions are available on the money invested under this scheme. Deposits and interest in a PPF account are completely tax-free. According to Section 80C of the Income Tax Act, 1961, no tax is levied on the amount deposited in PPF or Public Provident Fund.
Conclusion
PPF is a government scheme providing tax-saving post-retirement benefits. Through this scheme, individuals can invest a certain portion of their income for the short term or long term. The amount of interest earned by this invested money changes quarterly. Appropriate strategies must be followed to maximise the amount of interest earned on the money deposited in the PPF account. As the PPF amount is fully tax-exempt, it is a more profitable method of investment than fixed deposits.
If you need further assistance in calculating the interest amount on your PPF contributions, then make sure to use the PPF calculator by Vakilsearch. It is a handy, easy to use tool that helps you compute the interest your contributions will earn. This gives you a clear picture of the returns, helping you tweak your investments to meet your financial needs.
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