Why should you invest in PPF despite being an EPFO member? Steps to open PPF account online

PPF

Why should you invest in PPF despite being an EPFO member? Steps to open PPF account online

A part of employees’ salary is transferred to Employee Provident Fund ( EPF) as an initiative by the Government of India to create retirement corpus for the salaried class. However, if you are self-employed and want to create a snowball of money for your financial independence then, Public Provident Fund (PPF) can be an answer to money-anxiety. PPF is through a voluntary contribution and it has a lock-in period of 15 years. At present, the interest rate in PPF is 7.6%, experts advocates investing in PPF as it builds a tax-free retirement corpus. An account holder can deposit a maximum of Rs 1.5 lacs in the PPF account. An amount in excess of Rs 1.5 lacs in a financial year won’t earn any interest.
PF is applicable for salaried employees where a fixed amount is deducted from salary and taken as a contribution towards PF. It continues until retirement or till whenever the employee is employed. Even though PF and PPF offer a similar structure, PPF is done with a choice known as voluntary contribution fund i.e. VCF.
If you already have a Provident fund account then there is no need to start a new investment account in PPF. However, one should open a PPF account and deposit a minimum sum of Rs. 500 to keep the account activated. This account can come handy if you are planning to leave employment or divert an extra fund of a family member to avail the tax-free ceiling of Rs. 1.5 lacs under section 80C of the income tax act.
Another advantage of opening an account of the public provident fund(PPF) immediately is that the lock-in period reduces over time. After a lock-in-period of 15 years, the renewals are done in blocks of 5 years each which affords you access to funds and liquidity. Hence, both self-employed and salary earning people shall consider PPF.
Source: Financial Express

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