What is PPF?
Public Provident Fund (PPF) is a government-backed long-term savings scheme that offers guaranteed returns with sovereign guarantee. It's one of the safest investment options with attractive tax benefits.
Current PPF Interest Rate
7.1% per annum (Q4 FY 2024-25)
Interest is compounded annually and credited on March 31st every year.
Interest Rate History
| Period | Interest Rate |
|---|
| Jan-Mar 2025 | 7.1% |
| Oct-Dec 2024 | 7.1% |
| Jul-Sep 2024 | 7.1% |
| Apr-Jun 2024 | 7.1% |
| FY 2023-24 | 7.1% |
| FY 2020-21 | 7.1% |
PPF Account Rules
Minimum and Maximum Deposit
| Parameter | Limit |
| Minimum deposit | Rs 500 per year |
| Maximum deposit | Rs 1,50,000 per year |
| Deposit frequency | Max 12 times per year |
| Deposit modes | Cash, cheque, online |
Account Duration
| Phase | Duration |
| Initial maturity | 15 years from end of FY of opening |
| Extension option | 5-year blocks (unlimited) |
| Extension modes | With deposits / Without deposits |
Tax Benefits (EEE Status)
PPF enjoys Exempt-Exempt-Exempt (EEE) status:
| Stage | Tax Treatment |
| Investment | Deduction under Section 80C (up to Rs 1.5 lakh) |
| Interest earned | Completely tax-free |
| Maturity amount | Completely tax-free |
Tax Saving Example
Investment of Rs 1.5 lakh in PPF:
- 30% tax bracket: Save Rs 46,800 in taxes
- 20% tax bracket: Save Rs 31,200 in taxes
Loan Against PPF
Eligibility
- Available from 3rd FY to 6th FY of account opening
- Loan amount: Up to 25% of balance at end of 2nd preceding FY
Interest Rate
- PPF interest rate + 1% = Currently 8.1%
Repayment
- Must be repaid within 36 months
- No penalty for early repayment
- Interest charged if not repaid in time
Partial Withdrawal Rules
Eligibility
- Available from 7th financial year (after 5 complete years)
- No reason required for withdrawal
Withdrawal Limit
Maximum = 50% of balance at end of:
- 4th preceding year, OR
- Preceding year
- Whichever is lower
Example
In FY 2025-26 (7th year), you can withdraw 50% of:
- Balance on 31-Mar-2022 (end of 4th preceding year), or
- Balance on 31-Mar-2025 (end of preceding year)
- Whichever is lower
Premature Closure
Conditions for Premature Closure
Only allowed after 5 years for:
- Medical treatment (self, spouse, children, parents)
- Higher education of account holder
- Change in residency status (NRI)
Penalty
- Interest reduced by 1% from date of opening
- Example: If PPF rate was 7.1%, you get 6.1% for entire period
PPF for Minor Children
Rules
- Parents/guardians can open PPF for minor
- Combined limit of Rs 1.5 lakh applies (across all accounts)
- Account transfers to child's name at age 18
80C Benefit
- Parent gets 80C benefit for deposits in minor's account
- Limited to overall Rs 1.5 lakh cap
Who Should Invest in PPF?
Ideal For:
- Risk-averse investors seeking guaranteed returns
- Long-term goals like retirement, child's education
- Taxpayers in higher slabs seeking 80C deduction
- Self-employed individuals without EPF
- Conservative allocation in portfolio
May Not Be Ideal For:
- Those needing liquidity within 5 years
- Young investors with high risk appetite
- Those who have exhausted 80C limit via EPF
- Investors seeking higher returns
PPF vs Other 80C Investments
| Feature | PPF | ELSS | NSC | Tax Saver FD |
| Lock-in | 15 years | 3 years | 5 years | 5 years |
| Returns | 7.1% | Market-linked | 7.7% | 6.5-7.5% |
| Risk | Zero | High | Zero | Zero |
| Tax on returns | Exempt | LTCG 10% | Taxable | Taxable |
| Liquidity | Low | Medium | Low | Low |
How to Open PPF Account
Banks Offering PPF
State Bank of India
All nationalized banks
Select private banks (ICICI, HDFC, Axis, etc.)
Post offices
Documents Required
Identity proof (Aadhaar, PAN)
Address proof
Passport size photographs
PPF account opening form
Online Account Opening
Many banks allow online PPF account opening through net banking or app.
PPF Investment Strategy
Timing of Deposits
Deposit before 5th of month for that month's interest
Best: Lumpsum in April (maximizes interest)
Alternative: Regular monthly deposits (5th of each month)
Maximizing Returns
Invest full Rs 1.5 lakh for maximum tax benefit
Invest early in the year for higher interest
Consider lumpsum over monthly if possible
Extend beyond 15 years for continued tax-free growth
Maturity and Extension
At Maturity (After 15 Years)
Option 1: Withdraw entire amount
No tax on maturity amount
Account closed
Option 2: Extend without deposits
Continue for 5-year blocks
No deposits allowed
One withdrawal per year (up to full balance)
Interest continues at prevailing rate
Option 3: Extend with deposits
Continue for 5-year blocks
Deposits up to Rs 1.5 lakh allowed
Section 80C benefit continues
One withdrawal per year
Conclusion
PPF remains one of the best risk-free investment options in India, especially for long-term wealth creation with tax benefits. The EEE status makes it particularly attractive for taxpayers in higher brackets.
Use our PPF Calculator to project your PPF maturity amount.