Now, Invest in PPF Using Net Banking
Investing in the Public Provident Fund (PPF) has become simpler. Banks such as State Bank of India and ICICI Bank Ltd, authorized for PPF investment, are now offering the facility to invest in PPF online. If you have an account with these banks, you can invest in your PPF using National Electronic Funds Transfer, or NEFT. Additionally SBI and ICICI Bank also allow you to view your PPF balance using Internet banking if you have both your accounts—bank account and PPF account—with them.
How to open a PPF account
Although you can invest in PPF online, opening a PPF account is still an offline process. You need to fill up the necessary forms and give supporting documents such as a copy of Permanent Account Number (PAN) card, passport size photograph and residence proof to the bank. Since you already maintain a bank account, you needn’t go through the KYC process again. Once your PPF account is opened, you can invest in your PPF using the Internet banking facility. However, if you already have a bank account and a PPF account in the same bank but are not enjoying the integrated service, such as viewing your account balance online, you can call the bank and link the accounts. In the case of SBI, ensure you open your PPF account under the same customer ID as your bank account to get the integrated service.
How to invest online
In order to invest online, you will need to have an Internet banking facility, and you will need the bank name, branch name and the IFSC code of the branch in which you have a PPF account. If you have a PPF account in a post office, you will need to get your account transferred to an authorized bank that accepts online payments through NEFT. In order to transfer your PPF account, you need to submit relevant transfer documents, such as a certified copy of the account, account opening application, nomination form, specimen signature and a cheque or demand draft for the outstanding balance in the PPF account.
Why invest in PPF?
Technology has made investing in PPF convenient, but it is not only the ease that should make you invest. PPF is a risk-free and tax-free product that is also capable of generating positive returns after accounting for inflation. For about six years, PPF has given a return of 8%. Assuming that in the long term, inflation tends to be around 6%, the real rate of return or inflation-adjusted return from PPF is 2%. But last year the rate of interest was linked to government securities, and for this year, PPF is offering a rate of 8.8%.
PPF also enjoys exempt-exempt-exempt status. In other words, the contribution, accumulation and withdrawal are all exempt from tax.
Contributions of up to Rs1 lakh qualify for deduction under section 80C of the Income-tax Act. Even under the proposed direct taxes code, PPF is likely to enjoy the same tax advantage. “PPF is a very good investment product in the debt space, and the fact that it is becoming user-friendly is only a positive. Now customers don’t have to stand in queues for PPF investments,” says Pankaj Mathpal, Mumbai-based financial planner.
The rate of interest coupled with the tax advantage makes PPF one of the best financial products available in the debt space.