The full form of PPF is Public Provident Fund. PPF is an Tax free saving scheme offered by the Government Of India wherein an interest in your account is deposited every quarter and it is paid by government.
The PPF interest rate for this Quarter (July 1 to September 30) is 7.10% .
PPF Interest rate vary on quarterly basis. The PPF interest rate in the previous year’s Quarter (Q4) was 7.9%.
Public Provident Fund are government guaranteed scheme. One can open PPF account through bank or post office. In PPF, minimum amount one can deposit is Rs 500 up to Rs 1.5 lakh per year. Individual have to create PPF account, anyone can open it. In PPF the collected asset get’s only invest in government securities.
Under 80 C of IT Act , PPF investor will get tax deduction benefit up to Rs 1.5 lakh. In PPF both earned interest and principal amount is tax free.
PPF Interest Rate And It’s Historical Data:
Few years ago PPF Interest rates were quite high around 11-12%. But now in the year 2020 it’s fall upto 7.1% as you can seen in the below table. PPF offer guaranteed return 7.1%.
| PPF Interest Rate | Year |
| 12% | 2000 |
| 11% | 2001 |
| 8% | 2011 |
| 7.6% | 2018 |
| 7.9% | 2019 |
| 7.1% | 2020 |
In past PPF Interest Rates are huge now they are falling. So, Public Provident Fund is not that great investment options unlike Mutual Funds.
PPF have lockin period of 15 years. One need to put minimum 500 Rs in their PPF account. Public Provident Fund is not for NRIs. Investor can’t hold PPF on Joint accounts as per rules. PPF investor can avail loan against their PFF account balance.,
Only after 7 years one can withdraw some amount from their PPF account, but can only do one withdraw per year. Full withdrawal of your amount only possible after maturity ends i.e. 15 years.
One can even take loan after 3 years through their PPF account balance’s 25% in form of loan with around 10% interest rate.
Provident Fund or Employee Provident Fund:
PF being short for Provident fund. PF is an equivalent of EPF (Employee Provident fund). They are basically same. PF or EPF is an government saving schemes for retired employees.
EPF Interest rate is 8.50% for 2021.
| EPF Interest Rate | Year |
| 12% | 2000 |
| 9.50% | 2010 |
| 8.80% | 2015 |
| 8.50% | 2020 |
EPF account is open by Company for their employee. EPF account is only for employees unlike PPF. Here company and employee both can add money in account.
In EPF, money gets deducted from your salary and get deposited in PF account. In EPF, employee contribution is 12% of their basic salary+DA. 12% is get contributed in EPF account both by employee and company.
While in EPF the collected money gets invested in various financial instruments like Government securities, Money market instruments, corporate bonds and even in equity at small percentage.
One can withdraw only partial amount from EPF account , one can withdraw full amount only at the time of retirement or when you left job. There is an facility through which you can transfer PF amount from one company to another when you are changing your company.
To withdraw partial amount from you EPFaccount you need to provide valid reason for withdrawal like children’s education or medical emergency.
Under section 80 C of IT Act one can get tax benefit up to Rs 1.5 lakh in both EPF and PPF.
LIC:
LIC is also an government saving scheme where you can invest money for your bright future.
LIC return is around 4% to 6%. LIC tenure is flexible you can decide the tenure. But PPF have strict locjk in period of 15 years.
One can even get loans by pledging their LIC policy. LIC offer Insurance facility while EPF and Public provident do not offer any insurance policy to their subscribers.
Why Mutual Fund Is Better Option For Investment?
While Mutual Fund returns varies as per different schemes. But the average return is mostly around 15% with compounding benefit.
Most mutual fund schemes have no lock in period except few like ELSS. ELSS have lock in period of 3 years with tax benefit.
But, Mutual fund invest significant amount in Stock market so there is some risk unlike PPF where all their asset get’s invested in Government securities so there is no risk involve.
But there are so many benefits of Mutual Funds which most people are not aware of.
Kya Mutual Fund Sahi Hai . Find your answer with our Mutual Fund detailed guide.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Past performance of securities/instruments is not indicative of their future performance. This post is only for Educational purpose.
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