Public Provident Fund and National Saving Certificates (NSS)
Context
Recently, government has decided to leave the interest rate on small savings instruments unchanged for October-December quarter. Existing rates an instruments such as the Public Provident Fund and National savings Certificates have been retained. Economists said that the status quo on small savings rates was expected, considering there was little change in the average overall yields on government securities in recent months.
Public Provident Fund
- PPF is a government of India savings and investment scheme. It is a long term investment scheme popular among individuals who want to earn high but stable returns.
- A minimum of Rs. 500 and a maximum of Rs. 1,50,000 per financial year may be deposited.
- The total duration is of 15 years and central government determines the rate of interest on quarterly basis.
- Partial withdrawal is permissible from 5th financial year. One withdrawal is permissible every year form 7th financial year.
- Interest earned in PPF account is completely exempted from Income Tax.
- Indian citizens residing in the country are eligible to open a PPF account in his/her name.
Minors are also allowed to open a PPF account.
NRIS are not permitted to open a new PPF account.
7. Documents needed to open PPF account are-
- PAN Card
- KYC documents ( Aadhaar ,voter ID)
- Residential address proof.
- Form of nominee declaration.
National savings Certificates
- The National Savings Certificates is a fixed income investment scheme that can be open with any post office branch. It is a kind of savings bond that encourages mainly small to mid-income investors to invest while saving on income tax.
- It can be bought from the nearest post office with a fixed maturity period of 5 year.
- There is no maximum limit on the purchase of NSCs and there is a fixed interest of 6.8% per arum.
- Hindu Undivided Families, trusts, private and prude limited companies, NRIs not allowed to invest in NSCs.
- The principal invested in NSC qualifies for tax savings under section 80c of Income tax Act up to Rs. 1.5 lakhs annually.
- NSC certificates are accepted as collateral or security for secured loans in banks and NBFCs.
- Investors need to provide an original identification proof like passport, PAN Card, Voter ID, Driving License.
