The Public Provident Fund (PPF) is a centrally sponsored savings-cum-investment program renowned for its investor-friendly characteristics and long-term rewards. Under the Income Tax Act of 1961, the principal, interest, and maturity amounts will all remain tax-free because the scheme is classified as EEE (exempt-exempt-exempt).
Over the years, the PPF regulations have undergone multiple revisions by the Centre. The Department of Economic Affairs also issued a circular announcing significant adjustments to the PPF standards last month under the Ministry of Finance. Starting October 1, 2024, the Postal Savings Fund (PSF) regulations will be altered to address issues including children opening PPF accounts, individuals holding multiple PPF accounts, and Non-Resident Indians (NRIs) extending their PPF accounts through the post office’s National Savings Schemes.
“The powers to regularise irregular small savings accounts are vested with the Ministry of Finance,” states a circular printed by the ministry on August 21, 2024. As a result, the Ministry of Finance should refer all situations involving unusual accounts to this department for reconciliation.
Establishing a PPF Account in a Minor’s Name
Post Office Savings Account (POSA) interest will be paid on these types of irregular accounts until the person (minor) turns 18 and can start an account legally. Following that, the relevant interest rate will be settled.
The date the minor attains legal adult status or the date the person becomes eligible to open the account, shall be used to determine the maturity period for such accounts.
Two or More PPF Accounts
Assuming the deposit stays within the annual ceiling, the principal account will earn interest at the scheme rate. (An investor’s preferred account at any Post Office or agency bank where they wish to maintain their holdings after regularisation is known as the “Primary Account”).
So long as the main account doesn’t go over the annual investment limit, the funds in the second account can be combined with the first. Even after the merger, the main account will keep earning interest at the current scheme rate. There will be no interest charged on any refunds made to the second account if there is an excess balance.
From the date of opening, any additional accounts beyond the primary and second accounts will earn zero percent interest.
Account Extension for Non-resident Indians
The account holder, who is an Indian citizen who became an NRI during the duration of the account, will be granted the POSA rate of interest until 30th September 2024, provided that their PPF account was opened under the Public Provident Fund Scheme (PPF), 1968 and Form H did not specifically ask about the account holder’s residency status. After then, the interest rate on such an account will be zero percent.
Putting funds into risk-free speculation choices is as significant as having a different venture portfolio.
When paying attention to contributing, the profits produced from your speculations can give money related steadiness later on.
The investment can give money related security and pay one in great heights in later stages and that is the major reason for thinking of investment option after retirement.
Fixed Deposit
For senior residents, Fixed Deposit(FD) is one of the most widely recognized budgetary instrument to put away their cash. They want to contribute a lot of their cash in bank FD’s because the primary venture sum is viewed as more secure when contrasted with interests in value and the previous likewise offers guaranteed return as interest. And often times this is the only investment portfolio for 70 year old people. They usually prefer investment in Fixed Deposits because of tax exemption under Section 80C.
Normally, senior residents open an FD account with the save money with which they as of now have their current bank account. Be that as it may, it will request that you complete your Know-Your-Customer (KYC) process. You will be required to give a self-validated duplicate.
Some Interesting Facts about Fixed Deposit
Senior residents are normally offered higher loan costs when contrasted with the overall population. By and large, banks offer a 0.50 percent higher interest rate. Senior residents can pick whether they wish to get customary intrigue payouts i.e, cumulative or non-cumulative interest rates.
There is no restriction on the most extreme sum that you can put resources into an FD.
Banks have characterized a period including min and max for which FD record can be opened with them. Normally, one can put money into an FD for a base 7 days and a limit of 10 years. You can pick the period inside this range as per your requirements.
Retirees often don’t know where to invest retirement money ?However,apart from FD’s, there are other safest investments schemes too where you can invest your money.
5 Best Investment Schemes
1. Post Office Monthly Income Scheme
This is the best reserve funds plot that empowers you to invest a limit of Rs.4.5 lakh for single possession and up to Rs.9 lakh for joint accounts.
This month to month salary plot in India offers you a loan cost up to 7.6%, according to rates declared in Q2 2019 out of a plan that is known to offer dependable returns, however, the pay is available.
SCSS is an excellent plan for senior residents who need a not too bad hazard-free profit for a corpus subsidize.
The post office offers different sorts of store plans for those hoping to contribute. These plans are otherwise called little reserve funds plans. A portion of these plans, for example, NSC, SCSS, and so on additionally offer expense sparing advantages under charge 80C of the Income-charge Act.
So this scheme offers tax-saving benefits too under section 80C of the Income-tax Act.
The interest rates are amended every quarter by the government with a lock-in period of 5 years for the principal allowing pre-mature withdraws after a year. The Maximum amount invested is 15 lakh.
At the point when one resigns and there is a probability of the retirement reaching out for an additional two decades or progressively, at that point contributing a bit of the fund in mutual funds expect significance.
Grow with Mutual funds
MF’s can likewise be a piece of a retiree’s portfolio. Tax collection from debt fund settles on it, more than normal deposits, particularly for those in the most elevated or high-income society.
3. Tax-Free Bonds
Tax-exempt securities, even though not as of now accessible in the essential market, can likewise highlight in a retiree’s portfolio. They are given principally by government-supported organizations, for example, Indian Railway Finance Corporation Ltd (IRFC), Power Finance Corporation Ltd (PFC), National Highways Authority of India (NHAI) One, they are long haul speculations and full-grown following 10, 15, 20 years.
Investment options for retirees
4. Public Provident Fund (PPF)
There are two explanations behind this: its tax-exempt intrigue and the annual compounding rule. Since the PPF has a long residency of 15 years, the effect of compounding is tremendous, particularly in the later years.
Further, because the premium earned is assured by sovereign assurance, it makes it safe speculation. For example, retirement PPF is a debt item and it produces an income flow.
5. Pradhan Mantri Vaya Vandana Yojana (PMVVY)
PMVVY is for senior residents matured 60 years or more to give them a guaranteed return of 7.4 percent per annum. The plan offers benefits salary payable month to month, quarterly, half-yearly, or yearly as selected. The base amount sum is Rs 1,000 every month and most extreme Rs 9,250 every month. The greatest sum that can be put resources into the plan Rs 15 lakh. The residency of the plan is 10 years. The plan is accessible till March 31, 2023.
This is a plan offered by the Life protection Corporation (LIC) of India.
So, these were some of the best short term investment options for retirees. However, the considering any of these is totally depends upon the capacity of risk taking power of the individual as some of the schemes are subject to market forces.
Tripti Agarwal
