PPF Interest: The investment in PPF is calculated as per the 5th of the month. If the investor completes his investment by this date, then he gets the interest for the whole month. Therefore, investing between 1st to 5th of the month can bring only benefits.
PPF Interest: Public Provident Fund (PPF) has always been considered a safe and tax-free investment option. It is a small savings scheme of the Government of India. It gives returns with government guarantee. If you follow certain planning and rules, then you can increase your earnings in PPF to a great extent. Therefore, it is very important to understand the calculation of interest received on PPF.
The 5th date is very important for investors investing in PPF. If you remember this date, then you can earn a lot from interest. Let us tell you that the biggest strength of PPF is compounding. That is, the sooner you start investing, the more time your money will get to grow. By the way, a small investment started at the age of 20-25 can create a much larger corpus than a large investment started at the age of 40-50.
Invest before the 5th of the month
It is believed that it is necessary to invest in PPF on a correct date. It is believed that the interest in PPF is calculated on the minimum balance from the 5th of every month till the end of the month. If you deposit money for investment on or before the 5th of the month, then you can get interest on the entire amount of that month. Whereas if the investment is made after the 5th, then you can get the benefit of interest only on the lowest balance between 5th to 30th.
Tax benefits in PPF
PPF falls under the Triple-E (Exempt-Exempt-Exempt) category. This means that it offers tax exemption at three levels. First – you will get tax exemption under section 80C on investment up to ₹ 1.5 lakh every year. Second – the interest received on the investment will be completely tax-free and third – no tax is to be paid on the entire amount received on maturity of 15 years. This is the reason why PPF is considered more beneficial than options like FD.
Avoid premature withdrawal
PPF is a long term and safe investment scheme with a maturity timing of 15 years. However, in urgent situations, you can make partial withdrawals after 5 years, but doing so may affect the compound interest you get on your investment.
