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Public Provident Fund Latest Update: As the Central government decided not to increase the interest rate of PPF for the April-June quarter of FY 2023-24, the depositors will continue to get the same 7.1% interest as earlier. Notably, the PPF interest rate has remained unchanged for 12 quarters in a row. However, there are many benefits why investors need to continue to invest in the PPF account.
The income Tax benefit is the biggest reason why investors continue to invest in PPF. Even as the interest rate of 7.1% may seem low compared to other schemes like NSC, KVP, Post Office Time Deposit, the tax benefit of PPF makes it score higher than various other savings options.
PPF is such a scheme where you can invest for a long term of 15 years or even more for various financial goals. At 7.1% interest, an investor can get a tax-free corpus of more than Rs 40 lakh in 15 years and over Rs 66 lakhs in 20 years by investing Rs 1.5 lakh every year.
When investors are concerned about returns from various market-linked schemes, PPF is such a scheme that offers guaranteed returns as it is backed by a sovereign guarantee.
Investors can also take a loan (up to 25%) against the amount in their PPF account after the expiry of one year from the end of the financial year in which the initial subscription was made. Additionally, if you repay the loan within 36 months, only 1% per annum loan interest rate will be applicable.
As the Central government revises the small savings rates every quarter, the PPF interest may not always be the same at 7.1% and the interest rate is likely to go up in the future.
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