Investing in PPF? Why you should do it before 5th of every month

Are you one of those investing in the Public Provident Fund (PPF) to generate great long-term gains? Well, make sure you are paying the instalments before 5th of every month. This helps investors to gain interest benefit for that month. The interest rate offered on PPF accounts is calculated on the minimum balance in the account between the fifth day of the month and the last day of the month.

The interest on PPF is compounded annually. It is important to note that the interest on your PPF account is calculated on a monthly basis but credited to the PPF account on 31st March every year. One should be mindful of the timing of investments as otherwise investors will incur loss on interest. 

By following this simple practice, you can maximise your returns. There are several PPF calculators which can help you calculate your return. 

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How much can you invest?

In PPF, an investor can't invest beyond Rs 1.5 lakh per year. A PPF investor can stop investment after 5 years and can withdraw the whole amount after 15 years. The account can be transferred to other branches/ other banks or Post Offices and vice versa upon request by the subscriber. The service is free of charge.

What are the tax benefits?

Under Section 80C, an income taxpayer can claim tax exemption up to Rs 1.5 lakh per annum investment in PPF. However, this section gives a collective income tax exemption up to Rs 1.5 lakh which includes ELSS Mutual Fund, PPF, Voluntary Provident Fund (VPF) investments as well. So, if investors are putting in money in other option falling under Section 80C, then they  won't be able to claim income tax exemption for his or her investment in PPF.