Public Provident Fund (PPF) vs FD: This SBI account gives more returns than Fixed Deposit!

SBI Public Provident Fund (PPF) account offers nearly double interest than the regular savings bank account. Investment in PPF account enjoys tax exemption. After the investment, tax-free returns are provided to PPF account holders on maturity. The best thing is that there is no risk to investing in SBI PPF account. The current rate of interest on SBI PPF investment is 7.9 percent compounded annually. This is more than the interest rates offered on any of the SBI Fixed Deposit plans. At present, the highest interest rate offered on any of the SBI account in 7.00 per cent for deposit up to 1-2 years. 

About tax benefits on SBI PPF accounts, the bank's official website says, "Income Tax benefits are available under Sec 88 of IT Act. Interest income is totally exempt from Income Tax. Amount outstanding to the credit is fully exempted from Wealth Tax also." 

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Here's a look at some key features of SBI PPF account (Source - SBI website): 

Eligibility: Individuals in their own name as well as on behalf of a minor can open the account at any Branch. As per extant instructions, opening of PPF accounts in the name of Hindu Undivided Family is not permitted.

Investment Limits: A minimum of Rs.500.00 subject to a maximum of Rs.1,50,000 per annum may be deposited. The subscriber should not deposit more than Rs.1,50,000 per annum as the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act. The amount can be deposited in lump sum or in a maximum of 12 installments per year.

Loans and Withdrawals: Loans and withdrawals are permitted depending upon the age of the account and balances as on the specified dates.

Account Transfer: The account can be transferred to other branches/ other banks or Post Offices and vice versa upon request by the subscriber. The service is free of charges.

Premature Payment: Premature payment is allowed only after the account or the account of the minor account holder of whom he/she is the guardian has completed five financial years, where:

- The amount is required for the treatment of serious ailments or life threatening diseases of the Account holder, spouse or dependent children or parents, on production of supporting documents from competent medical authority;

- That the amount is required for higher education of the account holder or the minor account holder, on production of documents and fee bills in confirmation of admission in a recognized institute of higher education in India & abroad.