[kavensri]

Originally Posted by binand

So to maximise return from PPF you have to deposit the full 1.5L during the 4-day window of 1-4 April. I keep an alarm / reminder to do so. :-)

This is what exactly I do for my PPF, my wife's PPF and my daughter's SSY.

[meerkat]

Originally Posted by Ananthang

... I made an excel comparison and feel if we move the tax exemption out of equation, we are better off with regular FD ...

Obviously, if you take out the tax exemption, one of the big advantages of PPF, FDs will come out ahead! It's not a fair comparison.

In any case, FDs and the PPF are not competing/comparable products.

Originally Posted by binand

...

After CoB of the 4th of each month, the interest calculator takes your balance.
Interest for the financial year for that balance is calculated on pro-rata basis (ie, balance x remaining months x interest rate / 12).
The sum total of these 12 interest calculations is credited to your account on 31 March.

As illustration - suppose you deposit the max 1.5L via these three different methods (assuming interest rate is 7.25%):

A. A one-time deposit between 1-4 April: The interest for this FY will be 1.5L x 12 x 7.25% / 12 = Rs. 11250
B. A one time deposit on 5 April (to 4 May): Interest is 1.5L x 11 x 7.25% / 12 = Rs. 10313
..

The relevant PPF rule actually says:

Interest ... shall be allowed for a calendar month on the lowest balance at credit of an account between the close of the fifth day and the end of the month and shall be credited to the account at the end of each year.

So, your case B above would earn the same interest as that for the case A, -- depositing by the 4th of the month merely allows one extra day of insurance. Depositing on the 5th should be just fine in these days of direct transfer.

Actually, IIRC, it used to allow even cheque deposits by the 5th of the month, and it would still allow full interest for the month. But that concession has been removed now.
.

[Ananthang]

Got it. Understood what the term annualised interest credit mean, they calculate interest monthly but only compound it end of year. With new tax regime, I will continue with Term deposits. Thank you all for wonderful insights.

I feel guilty I use TBHP more for Non Auto items nowadays.

[speed79]

Originally Posted by Ananthang

I made an excel comparison and feel if we move the tax exemption out of equation, we are better off with regular FD as I have moved to New Tax Regime. I guess PPF is compounded annually only, but I am not able to confirm this, but banks compounding at Quarterly, I am leaning towards not going for PPF as returns are lesser than Banks and not worry about 15 year lock in.

Not going into quarterly or annual compounding calculations. PPF is EEE (Exempt-Exempt-Exempt) as per old tax regime. But even in new tax regime, you get benefits of last 2 exempts. So an FD and PPF both at 8% annual interest rate will give effective interest of 5.504% and 8% respectively, assuming that you are in 30% tax bracket (actually 31.2% including 4% cess). If you are in 50L+ or 100L+ or higher income bracket, the difference in effective interest will be higher due to surcharge.

Disclaimer: I am not a CA.

[binand]

Originally Posted by meerkat

Depositing on the 5th should be just fine in these days of direct transfer.

As I mentioned - I was quoting from memory. Please read the dates as "1st to 5th" and "6th onwards", instead of what I wrote, then.

[sanjeevs]

Originally Posted by kavensri

This is what exactly I do for my PPF, my wife's PPF and my daughter's SSY.

I have invested in SSY scheme for my daughter who is 19 years at the moment and have been investing since she was 10 years old. Prior to this the scheme was not existing.
Going forward I wish to withdraw the corpus for my daughter's higher education needs. So I would like to know if it would be possible to withdraw when she turns 21 or 22 years ?

[vaibhav_a_a]

Originally Posted by sanjeevs

I have invested in SSY scheme for my daughter who is 19 years at the moment and have been investing since she was 10 years old. Prior to this the scheme was not existing.
Going forward I wish to withdraw the corpus for my daughter's higher education needs. So I would like to know if it would be possible to withdraw when she turns 21 or 22 years ?

Good question - as I have a daughter too and I have opened her SSY . I'll try to answer basis my understanding of the rules that would apply to your case - .

• You can close the account only after 21 years of operation, so that's not possible. However if she gets married, provided she is older than eighteen, then the account can be closed - so this is one possibility in future for you.
  
• You can withdraw 50% of the amount after your daughter is 18, so that applies to you now itself. This is allowed for specific purpose like education etc.

Detailed rules on the national savings institute of India website are here : https://www.nsiindia.gov.in/(S(xvzzi...aspx?Id_Pk=174

[mxx]

Is there any FD where we can deposit monthly instead of lump sum?

[bijims]

Originally Posted by mxx

Is there any FD where we can deposit monthly instead of lump sum?

That is what we call a Recurring Deposit, please search for them from your trusted banks, NBFCs etc as most of them offer this.

[vrprabhu]

MXX, There are also flexible recurring deposit schemes i.e. you can pay more than the monthly fixed sum, so you can take advantage of surplus funds investment. However, withdrawal is possible only at the time of maturity or through foreclosure.

If the amount that you wish to deposit is large, say > 25,000 every month, do explore the sweep in / sweep out facility offered - you may get better returns.....