After the Government of India decreased the rate of interest on Public Provident Fund (PPF) from 8.7 percent to 8.1, all those persons who put hopes in it were shocked. This scheme is, however, beneficial for all salaried persons for getting tax exemption and getting more income in a long term of 15 years. After the new rate of interest came into force from April 1 this year, several persons have a big doubt on whether investing in the PPF is still beneficial or not. Too many investors are now doubting the PPF.
The PPF is a scheme run by the Central government and so there will be a security on the returns made here. The term of the scheme is 15 years. If needed, it can be extended to another five years. It is an excellent scheme for providing a fund for future purposes. This scheme is beneficial for getting money for higher education of children, marriage and for those who want to buy home in future. It also helps retired persons to have some fund for themselves.
Too many benefits
Considering the opinion of experts, the PPF is still more attractive than other schemes due to tax benefits and rate of interest. In this scheme, the rate of interest is 8.1 percent and the inflation rate is 5 percent. It means there is a profit of 3 percent. On the other hand, the rate of interest on bank deposits came down to below 8 percent. If we look at the income after tax, the rate of interest on bank deposits is below 6 percent. What will remain if we deduct inflation?
Comparing other benefits...
As the government decreased the rate of interest on several savings schemes, the interest rate on PPF is still more than all those schemes. The experts are saying that the PPF is one scheme which can give some returns in the long run withstanding the fluctuations of inflation. Complete tax exemption is there on the investments in PPF and the returns after expiry of the term.
The expert advice is that these kinds of schemes are the best alternative for those persons who feel that investments in stock market is a risky thing. The PPF can be considered by those persons, who invest in stock markets directly and also in mutual funds schemes, to decrease risk and to balance the investments.