[sbinews] PPF: The all-weather investment option (From 'Times of Money')
- From: "Rajendra PAI" <rspai.IT@xxxxxxxxxxxxxx>
- To: <sbinews@xxxxxxxxxxxxx>
- Date: Wed, 22 Oct 2003 12:03:23 +0530
PPF: The all-weather investment option
(From the Times of Money Website)
How much can I put in a PPF account?
PPF gives you the flexibility to put in a different amount every year. You can
invest as little as Rs 500 in a year when you are really cash strapped. You can
invest up to Rs 70,000 a year.
You may contribute to the PPF account opened in your children's names and claim
the rebate yourself. But the total sum that you are thus collectively investing
cannot exceed Rs 70,000, according to a notification (in October 2002).
You may invest in one lump sum a year, or in small installments, up to 12 in a
year. Unlike any other small savings plan, the date of handing over the cheque
is taken for crediting your account and not the day it is cleared.
So even if you wake up on the last day of a financial year, you can rush to the
bank and deposit a cheque into your PPF account.
What if I fail to pay even Rs 500 in a financial year?
Well, your account will be discontinued. But don't lose heart. The default can
be remedied on payment of a small fine along with arrears.
And if your account is in default, and you don't want to reactivate it for some
reason, you can open another account. The interest will continue to accrue in a
default account, and will be paid at the end of 15 years. But you can't
withdraw before that or take a loan.
How is interest on PPF account calculated?
The 8 percent interest is calculated on the lowest balance between the close of
the fifth day and the last day of every month. It is credited to the account at
the end of each financial year i.e. on 31st March. It is tax-free.
How can I take a loan in a PPF account?
A loan repayable in 36 months can be obtained in or after the 3rd year, up to
25 percent of the balance at the end of the preceding financial year.
You will pay one percent over what you get, i.e., nine percent on the loan for
the first 36 months.
If the loan is not repaid within 36 months, the rate goes up to six percent
over the PPF rate, i.e. 14 percent. You can take a second loan before the end
of the 6th financial year, after repaying the first one.
Can I keep a PPF account for longer than 15 years?
Yes, you can. You don't have to close it at the end of 15 years. You can
continue it further for an indefinite period in blocks of five years. You may
or may not contribute during this extension period.
How does nomination work?
The nominee can claim the dues, on demand. Where there is no nomination in
force, the balance will be paid to the legal heirs on production of succession
certificate/probate. If the balance is less than Rs 1 lakh, the legal heir can
claim it by producing a letter of indemnity, an affidavit, a letter of
disclaimer, and the death certificate of account holder.
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