We are living in times which are most uncertain. We have very less secure life when compared to any generation with our private jobs being non-permanent, even a person with riches might face difficult situations. In all these situations people keep running to save for the future. We will be working hard to leave the present life with no worries and also at the same time secure our life when we retire. Even the government wanted the people to have a peaceful financially secure retirement for each of its citizens and the laws of the nation are framed in this manner to help the citizens secure their retirement. The products such as Public provident fund(PPF) and Employee provident fund(EPF) are such investment product we can say that safeguard our future. We will learn all the details about PPF and EPF in this article and what is the benefit of each of these.
Think about it that at the time of your old age, you don’t want to work some job to lead a happy life and to meet your expenses. And at the same time, you don’t want to depend on someone else for your expenses. It is hence important that you safeguard your retirement financially by planning it now.
Public Provident Fund
Public Provident fund is started by the central government of India to make citizens safeguard their retirement by saving small amounts right from the initial days of their life. The Public Provident fund account can be opened by anyone who is the citizen of India and can start investing. It is not mandatory that a person has to be employed or has to have a regular job. Any individual who wanted to save, either he may be a self-employed or some contract worker or an individual who have no job. Anyone can open the account and can start saving in the account by contributing little amount every month.
Public Provident Fund (PPF) is a tax-free saving scheme regulated by the Indian Government. It is a long-term investment scheme with a lock-in period of 15 years. Individuals can start investing in PPF with a minimum amount of ₹. 500 p.a. The interest rate is set and paid by the government for every quarter. PPF interest rate for the third quarter of the year 2020-21 i.e. from 1st October to 31st December is fixed at 7.1%. Interest rates on PPF
One can Open a PPF account from any of the major bank accounts.
Benefits of PPD
The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 70,000.
Return on investment will be around 8%
tax benefit under Sec 80C, no tax on the maturity and no tax on interest earned.
If you’re involved in a legal dispute, a court cannot attach or question the money in your PPF account.
Employee Provident Fund
Employee provident fund is an investment scheme that is available only to the salaried people. Under this scheme, a stipulated amount (currently 12%) is deducted from the employee’s salary and contributed towards the fund.
when a certain amount is debited from the salary of the individual, the employee has to contribute an equal amount matching the amount of the employee and will be credited to the EPF account of the individual every month.
Benefits of EPF
Return on Investment: 8.65%
If you urgently need the money, you can take a loan on your PF. You can also make a premature withdrawal on the condition that you are withdrawing the money for your daughter’s wedding (not the son or not even yours) or you are buying a home.
tax benefit under Sec 80C.
The amount if withdrawn after completing 5 years in the job will not be taxable.