PROVIDENT FUND DEPOSITS

 Provident Fund Deposits 

Provident fund deposits are in two types.

a) Public Provident Fund (PPF)

b) Employees Provident Fund (EPF)

a) Public Provident Fund

It is a classic example for the attempt of the government to help people create savings for themselves. The Government of India put forward the public  Provident fund scheme to ensure that everyone could have some funds available in their old age. the minimum investment amount in public proud and fund is rupees 500 that year while the upper limit is rupees 7000 that air and investor can make up to 12 deposits in his public  Provident fund account every year. A lot of incentives like tax deduction 0 tax on interest etc are provided in public Provident fund scheme. Interest rate offered in PPF is 8 percentage per annum.

Advantages and disadvantages of public provident fund scheme

Advantages

  • Reduce the tax liability of the investor
  • The investor can make multiple deposits during a year
  • Maturity value is huge in public provident fund. 
  • Tax free.

 Disadvantages

  • Log in period of 15 years.
  • Interest rate may be change every year according to the government decision.

b) Employees Provident fund

It is almost a replica of the public Provident fund concept except that is a valuable only to salaried employees. Public provident  fund is available To any Indian citizen and it is voluntary but employees provident fund is  compulsory if the investor is an employee.

Advantages and disadvantages of Employees Provident Fund

Advantages

  • EPF contribution is tax deductible under section 80 C.
  • The employer will open a PF account for the employee.
  • The time of switching the joke job the present EPF can be transferred to the next employer.

Disadvantages

  •  Withdrawal of EPF is not possible during the working period.
  • Not a liquid investment from the point of the investor.
Pvident find deposits are good to invest. 

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