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Bharata Finance Posts

Bharat QR: All You Need To Know

Post demonetisation, the government has plans to fulfill a revolutionized motto: To create a forward “Digital India“. The government has taken a step further in their encouragement tactics by introducing Unified Payment Interface through the launch of BHIM App. Now the current trend that has been introduced to promote cashless transactions is Bharat QR. The Bharat QR will enable a simpler approach to availing the benefits of cashless transactions, minus the extra processing fee required in case of debit cards and other merchant payments. Let us take a closer look at the details of Bharat QR.

Bharat QR

What are QR Code Based Payments

QR code based payment basically provides a unified gateway for all payment modes. For example, a user wants to pay via credit or debit card. But the one accepting the payment does not have the swiping machine. This is usually a dead end, where cash payment is the immediate option pursued. Now another option can be considered. That is payments via interfaces Freecharge and Paytm. But again both the sender and the receiver need to have similar apps. Now, this is where Bharat QR comes to play. Being the unified gateway it does not need similar apps or a swiping machine. Bharat QR needs a supporting banking app like the BHIM App and you are all set to make the payments.

How Does Bharat QR Work?

Bharat QR is a code that will support all standardized payment means. It includes Visa, MasterCard, Debit Cards and Rupay Cards. Its range and flexibility make it user-friendly thus promoting more people to go for cashless transactions. The interface will help customers make payments even in the absence of swiping machines and similar payment apps. Thus a two-way benefit is seen: a shopkeeper need not invest in a Point of Sale (PoS) swiping machine and the customer does not have to incur the processing fee losses while making payments via debit cards on PoS swiping machines.

 Payments Via Bharat QR

Bharat QR’s interface has been integrated into Pockets App introduced by ICICI Bank and PayZApp introduced by HDFC Bank. More banks will soon be integrated by launching supporting banking apps. For generating the QR code, BHIM app has to be used. Thus before making payments with Bharat QR, make sure you have BHIM App installed in your SmartPhone. The following steps have to be taken thereafter to complete the payment:

  • Scan the QR code via the BHIM App.
  • It will redirect you to the payment portal associated with your bank. There enter the payment details and the amount you have to pay.
  • Add a remark as to where the payment is being made.
  • Enter the 4 digit passcode as generated by the BHIM App.
  • Your payment will be authenticated and the money will be debited from your account and initiated to the receiver’s account.
  • The receiver then needs to take a print out of the generated QR code and add it to the payment desk.
  • Thus the amount debited from the customer will immediately be credited to the receiver’s bank account.

Bharat QR: How Secure Is It?

Bharat QR does not demand your ATM pin or CVV details. You simply have to scan and pay. Thus it is an extremely secure interface to make all merchant payments. Your card details are protected and the payment details remain secure with the sender. Also, the receiver can receive the sum immediately in their bank accounts without going through the hassles of a swiping machine or mobile apps. Scan and Pay. Scan and Receive. That is the simple and secure fundamental of Bharat QR.

Here’s How You Can Transfer Your PPF Account From One Post Office To Another

It is usual for an individual to open a PPF account with the nearest post office branch. But in the era of job hopping and residence hunting, it is difficult to stay constant at a particular place. Thus in such cases, the PPF account needs to be transferred from one post office to another for greater convenience in future. Given below are the elaborate details of how the transfer can be made possible.

PPF Transfer: PO to PO

Primary Documents Required

The operation of transferring PPF from one post office to another involves certain formal documents and ID proofs. They are as follows:

  • The SB 10(b) Form
  • Address Proof
  • Personal ID Proof
  • The updated passbook associated with your PPF account
  • The address of the new post office.

The details of the documents are discussed below

The SB 10(b) Form

The SB 10(b) is the official documentation required to initiate the transfer of PPF account from one post office to another. SB 10(b) form is available online on the official website of India Post. This can also be physically collected from the post office in which you have your PPF account. The following details should be present mandatorily while filling the form:

  • The PPF account number.
  • The details of passbook associated with the PPF account.
  • Address of the present Post Office.
  • Address of the new Post Office.
  • Signature of the primary account holder.
  • Signature of the postmaster.

The form SB 10(b) has been designed in a letter format. Thus the above details have to be addressed to the current Post Office along with the PPF account number. After addressing is done it also requires three specimen signatures. After the account holder fills the primary details, the remaining information has to be filled after checking account balance. These details are to be verified by the postmaster.

Form And Documents Verification

Verification of the SB 10(b) form will be done by the postmaster by referring to the following documents provided by account holder:

  • The original updated passbook associated with the PPF account.
  • Address proof
  • Personal ID proof.

The verification will be done by checking the balance details in the passbook and matching it with the SB 10(b) form. Then further processing follows.

Submission For Processing The Transfer

Both the verification and submission process has to be done at the current or old Post Office. After the verification process is complete the postmaster confirms the transfer to be done with final signatures. The following processes follow:

  • The original updated passbook is returned to the PPF account holder.
  • The old account is set to close.
  • An application along with a demand draft addressed to the primary person concerned in the new Post Office.
  • The demand draft amount is basically the amount of balance in the PPF account.
  • The new Post Office will receive the application and the demand draft.
  • Then the individual has to report to the new Post Office for verification of credentials.

Opening Of PPF Account In The New Post Office

Post the verification of credentials at the new Post Office, a PPF account will be opened for the account holder. The amount in this account will be the transferred balance from the old Post Office. The account holder will them be issued a new passbook. There is an important point that the PPF subscriber must keep in mind after the transfer is successful. It is the verification of the balance details according to the old passbook. If the balance has been incorrectly transferred due to some errors a complaint must be issued.

5 Advantages of Investing In ELSS

Equity Linked Savings Scheme or ELSS is an equity mutual fund which has two-way benefits: excellent returns and tax saving. Thus it is a profit plus savings investment option that have multi-faceted advantages in the present market. Here are 5 advantages of ELSS that makes it a popular option for all investors.

adv of ELSS

Low Initial Investment Value

One of the primary advantages of ELSS is its low initial investment cost of Rs.500 (minimum) per month. Often investments generating high return rates tend to be costly and hence is not an affordable option for the majority. But any individual can invest with a minimal value. Since the concept is to invest in market shares the initial cost is a profitable aspect as you are getting greater returns for lower cost.

Flexible Lock-In Period

ELSS generates the best returns if invested for a longer period of time. But keeping an emergency scenario in mind, the lock-in period has been set at 3 years. This means that funds can be drawn from ELSS after a short tenure of 3 years and the funds withdrawn will be completely exempt from taxes. Thus it can be said that the lock in period is flexible and can be risked by all investors.

Tip: ELSS is not bound by a long lock duration, but is financially advantageous if the investment is for a longer period. This is because the market share rates are volatile and show an unpredictable graph of increase and decrease at times. But if invested for a longer time the average rates are almost always high producing good returns.

ELSS Generates Excellent Returns

ELSS generated returns are based on several market aspects. This includes the growth of stock, the present share value, etc. Thus it produces an overall return value from all sides making it an extremely beneficial investment. Other savings and investment schemes promise a return 8%-9% on the average scale. But when it comes to stocks of good quality produce very high returns, especially in the Indian economy. Thus the average return is 22.9% as calculated on the basis of last 3 years.

Can Be Linked To Other Trending Investments Like SIP

With the initial cost as low as a minimum of  500 INR per month, periodic investment is made easier for individuals. Thus continuous profits are gained on continuous investment. This concept can be made more beneficial by linking a SIP with the ELSS Scheme. Thus along with the funds saved in ELSS, a return amount will be generated monthly after the lock-in period of 3 years. The return amount generated will be due to the SIP investment linked. Moreover, as ELSS is exempt from taxes, the returns you gain on SIP is not taxable. Thus you can save and earn simultaneously.

Tax Benefits Of ELSS

ELSS is a tax saving scheme that falls under the Section 80C of the Income Tax Act. This means that it is an investment plus savings scheme of mutual funds that qualifies for tax deductions. According to Section 80C, the tax deductions are up to 1.5 Lakhs INR. Also, the returns earned (after the lock-in period of 3 years) is completely exempt from taxes. Thus ELSS ensures returns with tax exemption.

Also Read: 5 Mistakes to Avoid while investing in ELSS

Is ELSS for Senior citizens?

ELSS For Senior Citizens- YES or NO?

ELSS is an investment that is not exactly centered around senior citizens. This is the reason why there is a misconception regarding its benefits for senior citizens. Another notion related to this is that ELSS returns depend on market trends. Thus it is not suitable for senior citizens to invest in it as it involves taking a lot of risks. The truth, in fact, differs. ELSS is beneficial for senior citizens in many ways only if a judicious investment is done. Let us consider the possibility that ELSS holds for a senior citizen.

ELSS for senior citizens?

The Age Factor

The age factor usually deters senior citizens from investing in an ELSS scheme. This should not be the case. Practically thinking, ELSS is more beneficial with a short lock-in period of 3 years. This means that funds can be withdrawn within a short tenure in a case of an emergency. Also after the lock-in period, the withdrawn amount is not taxable. Another aspect of ELSS is its long-term benefits. It is safe to say that on an average, senior citizens who have just attained the age of 60 have 12-15 years of time to devote to investments. In such cases, ELSS generates the best returns as it has been seen that on a long term basis ELSS reaps highly profitable gains. Thus both tax savings and high profits requirements are met, which is essential for senior citizens.

Judicious Investment in ELSS is Completely Risk-Free

It is obvious that a risk factor is involved with ELSS as the scheme depends largely on unpredictable market trends. Though in the long run, it is almost always advantageous, senior citizens might have to think twice before taking the risk. But let us consider the positive side here: ELSS generates excellent returns with tax benefits. So why not avail these benefits in parallel to taking a safe route? Thus judicious investment must be made in ELSS. Instead of complete exposure to ELSS, part of investment must be made in it. With an initial investment cost of 500 INR per month (minimum), it is an affordable option. This would ensure three things:

  • Tax savings of up to 1.5 Lakhs INR through different schemes along with ELSS.
  • Security provided by the investments other than ELSS will mitigate risks largely.
  • ELSS will generate excellent returns.

A Regular Means Of Income

ELSS is technically an excellent retirement scheme. Low investment cost per month ( INR 500 minimum), the tax benefits plus the high return rates makes it one of the best investment scheme. The judicious investment will also lower the risk that ELSS presents. Keeping all these factors in mind including the lock-in period of 3 years an individual can take any of the following routes:

  • Investing in ELSS with SIP 3 years prior to retirement: If this scheme is followed, SIP will generate monthly returns after completion of 3 years. The returns are not taxable as SIP is done under ELSS. Thus on retirement, the flow of income will not cease.
  • Investing in ELSS post-retirement as savings: This is a savings option that can be considered. If investment in made in ELSS, and withdrawal is made after 3 years an average return of approximately 22.9% will be generated (as per recent calculations). Again this serves as an income source and will be beneficial in case of an emergency.




ELSS vs. PPF: Which One Is Better?

Equity Linked Savings Scheme (ELSS) and Public Provident Fund (PPF) are the most beneficial investment options currently. But there is variation in both of them regarding the investment amount return rates and risk factors. Thus before making a selection between the two, all factors have to be considered. Different investors have different demands and depending on those requirements the choice needs to be made.

elss vs ppf

ELSS vs. PPF: Initial Investment Amount

There is no maximum limit for investment in ELSS. Thus for investors having significant monetary assets, it is beneficial. The more the initial investment, the more is the return value. In the case of PPF which is government monitored, there is a maximum limit for investment. A PPF account holder cannot invest more than INR 1.5 Lakhs per annum. So, with respect to initial investment amount, ELSS is more flexible.

ELSS vs. PPF: Lock-In Period

ELSS has a lock-in period of 3 years. Thus the money invested in ELSS cannot be completely withdrawn for about three years. PPF has a lock-in period of 15 years. The money invested in PPF cannot be completely withdrawn till the maturity period is reached. Though withdrawals can be made from PPF after five years of investment, that is only up to a certain limit. Thus, comparing flexibility in the lock in period, ELSS triumphs PPF.

ELSS vs. PPF: Return Rates

ELSS is mutual fund investment in market shares by equity funds. Thus the return rates depend on the current share value of the market. PPF is a government monitored fund.

Thus the return rates are set by the Central government for each financial year. By far a graph between PPF and ELSS suggests that PPF has an average return rate of 8.2% per annum while some ELSS has a return rate of 17% per annum.

Thus, ELSS is more advantageous in terms of return rates as market return rates being higher than government return rates.

ELSS vs. PPF: Risk Factor

Investing in market shares involve a lot of risk factors. In a scenario of a disadvantageous market condition, the share rates for a company may go downhill. Thus investment in ELSS is prone to a lot of risks.

PPF being government monitored are liable to a much lesser risk factor as the dip in government interest rates is not very significant. In fact, PPF is the least risky form of investment. Thus, as far as the risk factor is considered, PPF is a much better option.

ELSS vs. PPF: Tax Benefits

Both ELSS and PPF are subject to the exemption of taxes under the Section 80C of Income Tax Act. A tax benefit of 1.5 Lakhs stands for both investment policies. Also, the withdrawn amount at the end of the investment period is completely exempt from taxes as both ELSS and PPF come under the EEE (Exempt, Exempt, Exempt) category.

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Which One Among ELSS And PPF should You Invest In?

ELSS is a beneficial policy for investors who have a risk appetite and demand very high return rates from their investment. Moreover, a business minded individual who has thorough knowledge about the market share rates should consider ELSS. Though in the case of ELSS, the longer the investment period, the better is the return, it is flexible. So for an investor who has short term goals of maximizing profits on investment should go for ELSSS.

PPF is a beneficial policy for those who are looking at risk-free and long-term investment goals. The return rate is decent, and investment is annuitized and managed properly.

You decide.

EPF vs. PPF (Employee Provident Fund or Public Provident Fund)

Employee Provident Fund (EPF) and Public Provident Fund (PPF) both are long term investment schemes actively efficient after retirement. As far as tax deductions are concerned both EPF and PPF as liable to similar exemptions under Section 80C. Also, both the schemes are similar in other respects like the rate of return and risk factor. But some other factors should be kept in mind while making a choice.


EPF vs. PPF: Initial Investment

The Employee Provident Fund (EPF) is what an employer provides the employee, for annuitized returns after retirement. The initial investment value in EPF is 12% of the basic salary of the employee and 3.67% of the basic salary of the employee contributed by the employer. Apart from this, 8.33% of the employee’s basic salary is also contributed by the employer and goes to EPS (Employee Pension Scheme). Thus, the initial investment value is divided between both employee and employer and the amount is a comfortable sum of money. The amount varies from person to person according to their basic salary, so there is no upper limit for investments and returns.

The Public Provident Fund is a similar scheme which provides an annuitized return after retirement. In the case of PPF, the initial investment made is subject to a maximum limit of 1.5 Lakhs annually. Any amount that exceeds this set limit is not liable for tax deductions.

Thus, in terms of flexibility in initial investment, EPF is a better scheme than PPF.

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EPF vs. PPF: Who Can Invest?

In EPF, only salaried individuals are eligible to open an account. This is because the EPF is deducted from the basic salary and is not accessible by any other means.

PPF, on the other hand, is an investment scheme that can be accessed by any citizen. It is more like a voluntary personal investment for returns post 60 years of age.

Thus in terms of accessibility, PPF is the more flexible than EPF

Related Post

PPF (Public Provident Fund) Investment: Should You Invest Your Money?

EPF vs. PPF: Return Rates and Tax Benefits

Both EPF and PPF are liable to tax exemptions up to 1.5 Lakhs under the Section 80C. Moreover when a graph was charted the return rates of EPF and PPF were found to be almost same. So in these terms, both the investment schemes are equally beneficial.

Related Post

PPF vs. FD (Fixed Deposit): Which Is Better For You And Why?

EPF vs. PPF: Withdrawal Policy/Liquidity

EPF has a very flexible withdrawal policy. In the case of emergency funds of high monetary value, the amount can be withdrawn from the EPF account without any deduction or fine. Also, there are no charges on the withdrawals made.

PPF has a maturity period of 15 years. It is also the lock-in period for PPF. No funds can be withdrawn during that period. Only after completion of 5 years, a limited withdrawal can be made with rest of the amount annuitized. Thus complete withdrawal can only be made after maturity. In a case of premature closure of a PPF account, a penalty compound interest of 1% will be deducted from the interest rates of each financial year. After the deduction, the eligible balance is paid back to the subscriber. Please note, from 2016 onwards, you are allowed to withdraw the entire amount subjected to certain conditions which I have mentioned in this article.

Thus in terms of withdrawal policy, EPF has a slight edge over PPF.

Where Should You Invest?

EPF is a better investment in terms flexibility. So if an individual has a choice to make, EPF is the better option. But of course for non-salaried individuals, PPF should be considered as it is a low-risk investment plan, with decent returns and tax benefits. Infact, both the plans are equally good if a long term scenario is considered.

PPF vs. FD (Fixed Deposit): Which Is Better For You And Why?

To ensure a secure future for ourselves, we indulge most of our time in deciding the right kind of investment. An investment which has maximal return rate at low risk with an additional bonus of tax saving is given the greater preference. Here, we have compared PPF and Fixed deposits, two of the most common investment options, to find out which is a better investment option and why.


PPF vs Fixed Deposit: Tax Benefits

As far as tax benefits are considered both PPF and Fixed Deposit are liable to a tax deduction of INR 1.5 Lakh under Section 80C. Thus, when considering a scenario of PPF vs. Fixed Deposits, an informed choice should be made, reviewing all other factors.

Fixed Deposits vs PPF: Ease

People do not like to go with policies with complicated/complex account opening process. However, both FD and PPF can be opened online or at a bank with the same ease. Here, both of them score equal marks.

PPF vs. Bank Fixed Deposit: In Terms Of Lock-in Period

Fixed Deposits have a maturity period set by the beneficiary of the Fixed Deposit account. The duration or lock in period of fixed deposit can be anywhere between 5 to 10 years. PPF, on the other hand, has a fixed maturity period of 15 years. The sum invested in PPF is locked for 15 years and can only be withdrawn completely after completion of the time period. Fixed Deposit is more flexible in terms of offering the account holder an advantage to choose the duration of the investment.

PPF vs. Fixed Deposits: Initial Investment Amount

In the case of Fixed Deposit, there is no maximum limit for the initial investment amount. Banks and companies accept a large investment amount as per the present policy. The minimum amount needed to start a Fixed Deposit is 1000 INR.

PPF, on the other hand, is a limited investment amount per annum. The amount should not exceed a maximum of 1.5 Lakhs for PPF. The minimum amount that needs to be invested, however, is 500 INR per year.

PPF vs. Bank FDs: Rate of Interest

Fixed Deposit is either a Bank Fixed Deposit account or Company Fixed Deposit. The rate of interest on Bank Fixed Deposits depends on the beneficiary’s bank return rate. Thus, when investing in fixed deposits, there is a range of choices offered to an individual regarding different interest rate. Fixed deposits come with marginal or no risk factor.

When it comes to PPF, it is a government monitored investment. The return rate is fixed by the government for each financial year.

It is seen that the rate of interest offered by PPFs is slightly better than Fixed deposit returns. So, return wise, I would any day prefer PPF over any Fixed deposit scheme.

However, when it comes to time period/lock-in period, Fixed deposits are a better form of investment. You do not need to wait for 15 years to withdraw your amount.

PPF vs FD: Withdrawal Before Maturity

Fixed Deposits have a permanent lock-in period as set by the beneficiary of the account. So withdrawal before maturity is liable to a fine set by the bank you invested in. PPF is more flexible in this respect. It allows premature withdrawal to a limited amount after the 5th financial year onwards. Thus for emergency withdrawal before maturity, PPF is a better option.

PPF is more flexible in this respect. It allows a premature withdrawal to a limited amount after the 5th financial year onwards. You are even allowed to withdraw the entire sum deposited under PPF, but under certain conditions without paying any penalty.

If you have a good amount of saving, which you can use for any emergency period, you can go with PPF. Otherwise, you can split your investment in 1:1 ratio.

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Should You Invest in PPF or Fixed Deposits?

For individuals having large monetary assets who want to go for a short term investment for a comfortable lock -in period, should consider fixed deposits. But an investor who wants to go for low risk, long term investment that will aid during retirement, should go for PPF. This is because the annual limit for investment set by the government will ensure that there is not a huge loss in case of interest rates falling. Plus, the withdrawal policy has also become more flexible from 2016. Not to mention, the return on maturity is high.

Since both Fixed Deposit and PPF are liable for similar tax benefits, investing in PPF or FD is equally advantageous in those terms.

My personal view on PPF vs FD: Invest 80 percent of your investment in PPF and remaining 20 percent in FDs.

PPF (Public Provident Fund) Investment: Should You Invest Your Money?

Public Provident Fund or PPF is a long term saving account with excellent tax benefits of up to 1.5lakhs per annum under Section 80C of the Income Tax Act. The primary objective of PPF is an intake of an annual amount from PPF account holders and returning some interest at the current rate. Monitored by the Central Government, a PPF account matures 15 years after its commencement. But there is a provision of an extension of an account for more than 1 blocks, where each block denotes 5 years.

PPF: All you need to know

Why Should You Invest In PPF?

Public Provident Fund is one of the safest long-term investment plans for citizens of India. It is monitored by the government and ensures excellent return rates (generally between 8 to 9 percent). The initial cost incurred to invest in PPF is very less (minimum INR 500) hence it can be availed by many. Also, it is liable to tax benefits under Section 80C of the Income Tax Act.

Rate Of Interest

The rate of Interest offered on PPF is almost constant. Each year the government revises this rate. Given below is a data sheet for the rates of Interest over the last 5 financial years.














How To Open A PPF Account

There are few eligibility criteria concerned with the opening of a PPF account. If an Indian citizen has fulfilled those criterions, a PPF account can be opened. The required documents need to be submitted while opening a PPF account. There are generally two methods of opening a PPF account

  • At Bank or Post Office
  • Via online portal

To get the complete details of opening a PPF account including the complete list of documents and eligibility criteria you can read more here: How To Open A Public Provident Fund Account

Maintaining A PPF Account

In order to maintain a PPF account till maturity, a contribution of minimum INR 500 has to be made each year to the account. If a PPF account is opened for a minor (less than 18 years), a guardian must oversee the proceedings related to the account. There is no upper limit for depositing money to a PPF account, though the minimum cannot fall below INR 500. Also, interest is calculated on amounts up to 1.5lakhs only. This investment amount can either be deposited as a lump sum or in 12 installments. A compounded interest on the deposited amount will be calculated and credited to the account holder annually. The rate of interest for the FY 2016-2017 is 8.10%.

PPF vs Other Plans

Before you decide whether to invest in PPF or not, compare it with other schemes and then decide:

PPF or Fixed Deposit

Depending on your age, liability, and other conditions, you may choose to invest in PPF or FD. To help you decide where to put your money in, I have written a detailed post on PPF vs Fixed deposits.


Between PPF and EPF, if you are confused about which investment is better for your, check out this article on PPF vs EPF.


If you are yet to decide which would be a better option in between PPF and ELSS, check out the detailed post on PPF vs ELSS

Alternatives To PPF

As per the above comparisons and studies conducted, there are several alternatives to opening a PPF account. These alternatives will ensure better financial gains plus the flexibility factor is greater. Here are following alternatives you can consider:

  • Equity Linked Savings Scheme type Mutual Funds
  • SIP (Systemic Investment Plan) Investments
  • Real Estate
  • Employees Provident Fund (For working citizens)


Who should invest in Public Provident Fund?

PPF is one of the best investments if you are looking for long term savings and retirement options. Also, it is government monitored, so the risk factor is less. Thus an investor with low-risk appetite and long term financial return goals must invest here.

What are the better investment options?

ELSS Scheme of mutual funds is a better investment option as comparatively. It has a lock period of 3 years with higher returns and similar tax savings. But when it comes to matters of risk, PPF is a comparatively a low-risk scheme, as ELSS depends on private and market share values and PPF is government set scheme where returns are fixed. In terms of tax savings NPS is a better option, but in the long run, PPF is better in terms of flexibility.

 Can interest be earned on failure to maintain the account?

For each year that the account remains inactive, no interest is earned as the account is deactivated. In the case of revival of account, a compounded interest will be earned on the remaining balance.

Can joint accounts be held?

No, in the case of Public Provident Fund, joint accounts are not allowed. One person can open one account. However, there is a provision for a nomination.

Who can open an account for a minor?

Only parents and legal guardians are allowed to monitor an account opened for a minor. Grandparents are not allowed this provision.

How to calculate interests gained from a Public Provident Fund Account?

All investments made on or before 5th of a month is liable for interest calculation. For example, if you deposit INR 75,000 on 1st August and INR 75,000 on 15th August, then a compound interest will be calculated on INR 75,000 only.

Drawbacks Of PPF

Every scheme is subject to its own set of advantages and disadvantages. Similarly, as there are several advantages of a PPF account there are few disadvantages. An individual must be fully informed about the following drawbacks before proceeding to open a PPF account:

  • The maturity period of 15 years is too long a time period. Thus it is not easy to liquefy the monetary assets invested in PPF. Even in the case of premature withdrawal, the amount withdrawn is subject to various terms and conditions. Hence, the flexibility of lock-in period is very less.
  • Interests in PPF is calculated up to an investment of INR 1.5 Lakhs per annum. Thus anyone investing more than that amount at once is liable to definite losses.

Maturity Of PPF Account

The Public Provident Fund account holder has 3 options on the maturity of the account:

  • Completely withdrawing the lump sum generated on maturity. Thus a case where the investor has invested 1lakh per annum in PPF for 15 years, they will receive a lump sum of 30lakhs on maturity. Thus the return rate is high.
  • Extension of PPF Account Without Extra Deposit: After the maturity of the PPF, if has been extended for one block of years, then the subscriber may make deposits and withdrawals based on sole discretion. As to deposits, there are no conditions applied, but when it comes to withdrawal, only one withdrawal is allowed per financial year for an extended account. The remaining amount is annuitized.
  • Extension of PPF Account With Extra Deposit: After the maturity period an account holder can choose to deposit extra into the PPF account and extend it further. In this case, the account holder can withdraw 60% of the money in the account within one block of 5 years. Only one withdrawal can be made annually.

Lock-In Period And Withdrawal Scheme For A Public Provident Fund Account

A PPF account as a lock period of 15 years. But there is a flexibility in this scheme. After the beginning of the 7th financial year following the commencement of the account, withdrawals can be made. The amount that can be withdrawn is either of the followings which is lower:

  • The withdrawal amount is equal to 50% of the amount that is present after the 4th financial year preceding the year of withdrawal.
  • The withdrawal amount is equal to 50% of the amount at the end of the preceding year.

Reviving A PPF Account In Case Of Failure To Maintain It

If a subscriber fails to pay the minimum amount of INR 500 to maintain the PPF account, the account is deactivated. In order to revive the account, the account holder must pay an additional INR 50 along with the minimum contribution of INR 500 for each inactive year. Public Provident Fund has the provision of nomination. Thus failure to maintain an account in the case of death of the primary account holder has other rules. In such a case, the entire amount can be withdrawn by the nominee or heir as the account cannot continue in the absence of primary holder.

Closing A PPF Account Prematurely

To increase the flexibility of a PPF account, changes were made regarding the premature closing of an account in 2016. After the end of 5 years, an account can be closed and the entire amount can be withdrawn in case of medical necessities or education. But, a penalty of 1% of the interest has to be borne by the account holder.

How To Close A PPF Account: Permanent Closure

After the maturity period of 15 years, if you wish to close down your PPF account it can be done via your respective Bank or Post Office. There are certain conditions as far as closing your account is concerned.

  • You can completely withdraw your funds from the PPF account. The funds withdrawn are subject to the set interest rates, hence you can earn the complete interest amount.
  • There is also an option to withdraw the amount in installments. But this option can be availed for only a year after the maturity.
  • If you do not close your PPF account after maturity, you will continue to earn an interest. But you cannot add any further monetary funds to that account. Also, a new PPF account can only be opened if you close your existing account.

How To Open A Public Provident Fund Account

Public Provident Fund is one of the most efficient schemes introduced by the government of India for all citizens of the country. The Public Provident Fund Account is liable for excellent tax benefits as the interest earned on PPF deposits are free from taxes. Then the contributors to PPF Scheme can claim tax deductions and get good returns, making it the most beneficial investment especially from the post-retirement point of view. Given below are all details regarding opening a PPF account.

PPF account

Public Provident Fund Account Requirements

Various regulations guide an investor who wants to open a PPF Account. There are certain eligibility criterions laid down along with documents to be provided to commence the account. To maintain the account there are various requirements to be fulfilled both financially and legally. Further details are specified next.

Eligibility Criteria For PPF Account

Given below are the eligibility rules that stand for individuals interested to open a PPF Account:

  • Only an Indian citizen is allowed to open a PPF account.
  • The starting age for opening a proper PPF account is 18 years. There is no upper limit in age.
  • If a PPF account is to be opened for a Minor (citizen below 18 years) then a deposit limit of 1.5lakhs is set per annum. Also, a minor’s account can be opened only the parents or legal guardian.
  • The account can only be opened by an Indian citizen residing in India. No NRI’s are allowed to open a PPF account. But, if an Indian resident becomes an NRI post opening of the PPF account, they are allowed to continue with the account until the date of maturity.
  • One person is eligible to open only one PPF Account.
  • Post-May 2005, Hindu Undivided Families have been disallowed from opening PPF accounts. If any citizen belonging to HUF is an account holder before 2005, they are allowed to maintain the account till the date of maturity.

Documents Required To Open A PPF Account

Following are the list of documents needed to open a PPF account. All the most updated copies of the documents are required.

  • Updated Passport, Aadhaar UID Card, PAN Card, Rental Documents/Residential Proof, Letter of the Employer, Driving License, Voter ID Card, Statement Records of Bank Accounts, Cheque Signed By the prospective account holder(Signature Proof). Also, keep copies of all these documents.
  • In addition to these documents, you will need recent photographs.
  • A fully filled and approved form for account opening.
  • Also, a Nomination Form has to be filled in case the account holder is naming nominees.
  • Age proof ID like Birth Certificates in the case of Minors.

Note: The bank may ask for other documents on their sole discretion.

How To Open a PPF account?

A PPF account can be opened at either bank, post offices or online. It is an initial low-cost investment account. It can be opened in the denominations of INR 100, with the total annual deposit of minimum INR 500.

How To Open a PPF account: At Banks or Post Office

The government authorised banks and post offices can be contacted for opening a PPF account. A physical copy of the Account Opening Form can be obtained from the bank or post office. This form is to be filled properly and submitted along with the copies of the required documents as specified by the bank or post office. Then, after approval, an initial deposit is to be made to commence the account.

PPF Accounts can be opened in Banks that have been authorised by the government since this scheme is totally monitored by the Government. Also, sole discretion, the government can withdraw the authority from any bank.

How To Open a PPF account Online

A PPF account can be opened online via the website of any government authorised bank or an agent bank that provides services for the authorized banks. The Account Opening form is to be filled online and submitted through the online portal of the bank. A variety of benefits is provided by some authorised banks like connecting the PPF account with the savings account, generating online statements of the financial assets. All fund transfers can be done online. Thus, with the introduction of the online option, more investors are considering it as compared to the traditional methods of physically opening it at banks or post offices.

Tax Saving Options: Where Should You Invest Your Money

Investment for tax saving is something that confuses every individual. A plethora of choices but an inadequacy of information. So here are the list of all investments and their tax benefits that will definitely help you decide further.

tax saving options

ELSS: Equity Linked Savings Scheme

The financial year 2017-2018, brings a new India under demonetisation and various schemes changing the nature of Tax Saving Act. Equity Linked Savings Scheme is a Mutual Fund which is diverse in nature. It is viable for Tax Exemption under Section 80C. It has a lock period of 3 years meaning that no withdrawal can be done from the ELSS account for 3 years.

Under this scheme, all investors will be having a two-way benefit: high returns on the investment and deduction of taxes.  The biggest advantage here is that dividends that are gained under ELSS schemes are exempt from taxes thus the profit returned is high. Also, ELSS has a short lock period enabling the investor to access the amount invested and the returns easily. All in all, ELSS is the best place to invest your money.

ELSS Rating: 10 Star

Read: Mistakes to avoid while investing your money in ELSS

NPS: National Pension Scheme

The National Pension Scheme has been revised and a New Pension Scheme has been introduced for the benefit of private and semi-government employees. Under this scheme, apart from all government employees, the private employees will also receive an annuitized pension amount on investment in NPS. A huge benefit is that an additional deduction of INR 50,000 will be made in taxes for a citizen investing in NPS.

Thus, the tax deduction on contribution to NPS will be 2lakhs rather than the stipulated 1.5lakhs. When compared to ELSS, the lock period is higher and even after retirement, only 40% of the investment can be withdrawn. Also, the returns may not be as high as ELSS dividends. But as far as tax saving is concerned NPS is an excellent scheme.

NPS Rating: 9 star

NPS: Should you invest your money in NPS

ULIP: Unit Linked Insurance Plan

The Unit Linked Insurance Plan, commonly known as ULIP is like an integrated insurance policy that gives the benefits of both an insurance policy and an investment scheme. It is a flexible scheme that enables the investor to switch between diverse options, invest in other linked schemes or surrendering of the policy. ULIP is viable for tax benefits under the section 80C.

Along with that, the returns on the investments are profitable. The only disadvantage is that withdrawal is not possible from a ULIP account till the sum matures. But apart from that, it is a risk-free scheme giving a three-way benefit: tax savings, returns on investment and insurance cover.

ULIP Rating: 8 Star

PPF: Public Provident Fund

The Public Provident Fund is an integrated monetary savings and tax savings account. This scheme aims at providing a flexible saving by allowing investments and good returns along with tax benefits. The PPF account is an attractive investment scheme as the interests on investments are completely exempt from taxes.

Related article:

How To Open A Public Provident Fund Account

The only drawback is that PPF is monitored by the government hence the interest rates may not be as high as private Mutual Funds. Otherwise, it is an excellent option for someone who is building up a long terms savings account for the period after retirement. PPF also allows benefits in taxes for nominees of the primary account holder.

PPF Rating: 8 Star

VPF: Voluntary Provident Fund

The Voluntary Provident Fund is an extended version of the PPF wherein an investor is allowed to add a stipulated value to the provident fund periodically. It is viable for tax deductions under Section 80C and an amount up to 1lakh can be saved under it. An additional benefit of VPF is that it helps an investor increase the financial assets in the provident fund from time to time. The interests gained on VPF investment is not taxable till the interest rates reach 9.5%. So the disadvantage occurs when the interest rate becomes 9.5%. Otherwise, it is an excellent tax saving and investment option.

VPF Rating: 7 Star

Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana is a government scheme introduced by Narendra Modi to empower a girl child and ensure proper education for her. The parents of the girl child investing in this scheme will get tax benefits as per Section 80C. Plus the returns on investment made to this account will be used for funding education expenses for the girl child. The disadvantage of this scheme is that it is gender specific so a large number of people cannot avail it. Also, the returns are sometimes insufficient in fulfilling all requirements. But other than that it is an excellent scheme for both tax saving and providing financial security to the girl child.

Sukanya Samriddi Yojana Rating: 6.5 Star

Senior Citizen Savings Scheme

The Senior Citizens Savings scheme is to support all senior citizens by increasing the return rates on their investments. It is an attractive tax saving scheme but the returns are taxable at source if the interest amount exceeds INR 10,000 per annum. Otherwise, it is an excellent scheme with high return rates specifically designed for senior citizens.

Senior Citizen Savings Scheme Rating: 6 Star

NSCS: National Savings Certificates

The National Savings Certificates, most commonly known as NSCS are a risk-free investment option for all working citizens. The investment in NSCS can be made for 5 years or up to a decade and it generates a fixed income like fixed deposits. An annuitized fixed income is returned on this investment at a rate of interest decided by the government of India. This scheme is viable for tax deductions under Section 80C only if the interest gained from NSCS are shown as income. An annual investment up to INR 1 lakh is to be made for tax savings. So apart from the fact that NSCS ensures tax savings only after a few hassles, it is a good investment option with high returns.

NCSC Rating: 5 Star

Bank FDS: Fixed Deposits

Bank Fixed Deposits are a long term investment schemes with fixed returns on maturity. All schemes under fixed deposits do not qualify for tax deductions. Thus to ensure tax saving through Fixed Deposits, an account known as Tax Saving Fixed Deposit needs to be commenced. These fixed deposited are viable to tax deductions up to 1.5lakhs like other tax saving schemes. Though in the long run, the returns generated will not be as high as ELSS. Also, the withdrawal policy is not flexible but it ensures tax savings and a good lump sum after maturity.

Fixed Deposit Rating: 5 star

Related Post:

5 Reasons You Should Invest In A Fixed Deposit Today

Pension Plans

Pension Plans enable an investor to contribute part of their savings in a pension scheme. This amount matures like recurring deposits and thus generates huge monetary accumulations. Thus good income can be gained from pension plans after retirement. The only disadvantage is that no returns are generated from pension funds till the investor reaches an age of 60. Also, after maturity 2/3rd of the returns are treated as income and are taxable at marginal rates. But initially, this is viable to tax deductions up to 1lakh under Section 80C. Thus pension funds help in tax savings for 1/3rd of the lump sum and provide an excellent accumulation, financially.

Pension Plan Rating: 4 Star

Insurance Policies

The tax deductions are separate for all insurance policies. In the case of life insurance, an individual is liable for tax deductions up to 1.5lakhs. After the death of the insured individual, all proceeds are tax-free. In the case of health insurance, the tax deductions are INR 20,000 for senior citizens and 15,000 otherwise.In case the insured individual is facing a life threatening health condition, all proceeds are tax-free.

Also Read: This is why you should invest in LIC

Thus from the tax saving point of view insurance policies do not have much to offer. But in the long run, insurance is an important necessity.

Insurance Plan Rating: 3 Star