PPF AT A SNAPSHOT:

WHO CAN INVEST :	Individuals
MINIMUM INVESTMENT :	500 Rs.
MAXIMUM INVESTMENT :	100000 Rs.
INTEREST :	8.8% compounded annually
MATURITY :	15 YEARS
PREMATURE WITHDRAWL:	AFTER 4 YEARS
TAX BENEFITS:	SEC.88

Public Provident Fund:

A PPF is a long-term savings plan with attractive tax benefits. Interest is given at the rate 8.8 % per annum. It is suitable for those who are not looking for short-term liquidity or regular income. Normal maturity period is 15 years from the close of the financial year in which the initial subscription was made. The Maturity values for PPF account would depend on what we invest each year .To illustrate, look at the following table:

• Who should invest:

PPF is mainly suitable for long-term saving and for availing of tax incentives. The lump-sum amount that you receive on maturity (at the end of 15 years) is completely tax-free. PPF does not provide any avenues for regular income. It provides for accumulation of interest income over a 15-year period, and the lump-sum amount (principal + interest) is payable on maturity. However the interest amount would depend upon the prevailing rate of interest on your PPF at any given time. These rates are notified by the GOI in the Official Gazette from time to time, and are calculated in such manner as is specified in the scheme.

• Minimum Investments:

The minimum investment in a PPF account is Rs 500 per annum for each year of the Scheme. The maximum prescribed contribution is Rs 1, 00,000 per annum. The highlight of the scheme is that you can vary your investments between Rs 100 and Rs 70,000 every year in multiples of Rs 5. The maximum number of installments in a year is 12. No fixed investment in required. A PPF Account passbook is issued to the depositor by the bank where the account is held, which can be updated from time to time.

• MATURITY:

The duration of a PPF account is 15 years, i.e., 15 complete financial years. If a person opens a PPF account on March 3, 2004, the account will mature on April 1, 2021. Even after the expiry of 15 years, the PPF Account can be extended for duration of five years at a time.

• PREMATURE WITHDRAWL:

Loans can be availed of from the 7^th Years onward. Amount of such loans will not exceed 50 % of the amount that stood to your credit at the end of the third year immediately proceeding the year in which the loan is applied for. You will continue to earn interest at the specified rate on your balance in the PPF Account after availing of the loan facility. However, only one withdrawal is allowed per year.

• LOAN FACILITY:

Loans can be availed of from the third to sixth year. Amount of such loans will not exceed 25 per cent of the amount that stood to your credit at the end of the second year immediately preceding the year in which the loan is applied for. You will continue to earn interest at the specified rate on your balance in the PPF Account after availing of the loan facility.

• DISCONTINUATION OF PPF ACCOUNT :

If you stop subscriptions to your PPF account, your account will be treated as discontinued. But it cannot be closed prematurely. It will be closed only at maturity, till which time it will continue to earn interest. However, you cannot take loans or make withdrawals from a discontinued PPF account.

• TAX IMPLICATIONS:

Besides long-term savings, the most attractive feature of PPF is the tax incentives it offers. The interest income earned in PPF and the lump-sum amount received on maturity or premature withdrawal is completely tax-free as per the provisions of the Income Tax Act, 1961. The scheme also offers tax benefits under Section 88 of the Income Tax Act, 1961 as indicated below:

Gross Total Income (Rs.)	Rebate
0 - 150,000	15%
150,001 - 500,000	20%
500,001 & Above	Nil

Rebate is calculated @ 30 per cent if your gross annual salary is upto Rs 1, 00,000. This also helps to reduce the actual amount invested over a 15-year period. You can also open an account in the name of your spouse or children including married daughters and claim the tax rebate if the contribution is made out of your personal taxable income.