The Public Provident Fund (PPF) is the most popular tax-saving investment due to sovereign guarantee, attractive rate of interest and tax benefits on investments, interest as well on the maturity amount. The tax exemption at every stage of investment provides PPF the privileged EEE (Exempt, Exempt, Exempt) status.
The benefits of EPF (Employees Provident Fund) are available to predominantly employees of private sectors and the benefits of GPF (General Provident Fund) are available to government employees under the old pension scheme, while PPF has a wider reach with its benefits available to the general public, including the employees of private and government sectors.
The Public Provident Fund also enjoys legal immunity and the amount available in the PPF account of a person can’t be attached to pay off liabilities through a court order.
However, a person may open only one PPF account for himself and one each for his/her dependent children, and the combined contribution by a person can’t exceed the maximum annual investment limit, which is currently Rs 1.5 lakh per annum.
Contributions made in PPF accounts are long-term in nature and the initial period of investment is 15 years. After maturity, an account holder may extend the limit any number of times for a block of 5 years with or without further contributions.
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While the maximum investment limit is Rs 1.5 lakh in a financial year, a minimum annual investment of Rs 500 is necessary to keep a PPF account active.
An account holder may deposit money maximum 12 times in his/her PPF account in a year.
But how much amount may be deposited in cash in a PPF account?
“Practically online transfers are done to a PPF account. In case of cash deposit, post offices are accepting cash upto Rs 50,000 per day. Presently the cash deposit of more than Rs 1,50,000 is not being accepted by the PPF system in a postal PPF account,” said Sudhakar Sethuraman, Partner, Deloitte India.
However, there are instances that banks discourage the account holders from depositing cash in the PPF accounts even if the figures are Rs 50,000 or less.