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A Public Provident Fund or PPF account is not just an investment tool that helps you save income tax outgo on your investment and its return. There are various other benefits beyond income tax that a PPF account holder must know. As per the PPF account rules, one can get loan against one's PPF balance during the financial crisis along with unlimited extension facility.

Speaking on the PPF account benefits other than income tax exemption under Section 80C of the Income Tax Act; SEBI registered tax and investment expert Jitendra Solanki said, "PPF is one of the high yielding (current PPF interest rate is 7.1 per cent) risk-free investment instruments, which is backed by the Government of India (GoI). It can be used as an avenue to raise fund as well. One can apply for a short-term loan against one's PPF account."

Asked about the top 5 benefits of PPF account beyond income tax exemption Jitendra Solanki listed out the following PPF account benefits:

1] Risk free investment: PPF investment is 100 per cent risk-free as it is a GoI-backed small saving scheme, which is not linked to the stock market movement. In case of bank default, one's PPF balance amount will remain 100 per cent secured. Most importantly, the PPF balance won't be added in 5 lakh insurance guaranteed by the GoI to bank account holders.

2] Avenue for fund raiser: In case of financial emergency, a PPF account holder can get short-term loan at mere 1 per cent interest rate per annum. However, one can get this loan against PPF facility only from 3rd to 6th year of PPF account opening. After six years of PPF account opening, one becomes eligible for partial withdrawal from the PPF balance.

3] Unlimited extension facility: A PPF account has 15 years maturity period. But, one can extend one's PPF account in blocks of five years by submitting 'PPF Account Extension Form.' This can be done for unlimited number of times. So, a PPF account holder who has opened PPF account in the nascent phase of one's career can use the PPF account as retirement-oriented investment tool buy using this unlimited extension facility.

4] Ease of investment: A PPF account holder can invest minimum 500 and maximum 1.5 lakh in one financial year. One can do 12 deposits in one's PPF account in a particular financial year. So, one can deposit money in one's PPF in monthly mode like SIP as well.

5] Compounding benefit: Since, PPF account is a long-term investment. The investor is eligible for interest on interest means compounding benefit on one's deposits.

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Asit Manohar
Chief Content Producer at Live Mint Digital Team
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