Public Provident Fund (PPF) – 7 Unavoidable Benefits of PPF.

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The Public Provident Fund (PPF) is among the best available pension investment funds, providing tax-free compensation and a stable interest income. It’s a perfect risk-free option with an initial 15-year lock-in period where you can deposit up to Rs 1.5 lakh per year and currently earn an interest rate of 8 percent.

What Is PPF?


One of the most common long-term saving-cum-investment items is the PPF account or Public Provident Fund scheme, primarily due to its combination of protection, returns, and tax savings.

The PPF was first provided to the public by the National Savings Institute of the Finance Ministry in the year 1968. It has since emerged as a powerful tool for investors to build long term capital.

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Investors use the PPF as a method to create a portfolio for their retirement by periodically, over long periods of time, setting away amounts of money (PPF has a maturity of 15 years, and the capacity to prolong the tenure). The PPF is a major favorite with a small saver, with its competitive interest rates and tax advantages.

Eligibility Criteria

Anyone who is an Indian citizen can only open PPF account NRIs are not eligible to open PPF accounts.

However, a resident Indian who has become an NRI following the opening of a PPF account may continue the account until maturity

Additionally, parents/guardians can also open PPF accounts for their minor children.

It is not possible to open joint accounts or multiple accounts.

PPF Product Features

  • Attractive 7.1 percent interest rate that is completely excluded from income tax under Section 80C
  • Good 15-year long-term investments
  • Deposit Sum as small as Rs.500 and maximum Rs.1,50,000 in a single financial year. Deposits may be in multiples of Rs.50
  • The loan may be used between 3rd and 6th financial year
  • Partial withdrawal facility may be used after completion of 5 financial years
  • The account may be extended in a block span of 5 years after maturity
  • Deposits to Public Provident Fund (PPF) Accounts may be made in the form of cash, cheque, electronic transfer of funds from Savings Account and fund tracking.

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1.Tax benefits: PPF is and end of expenditure benefiting from the EEE (exempt-exempt-exempt) tax model. Any donations made to the PPF under section 80c are tax-exempt, up to 1.5 lakh per year. In addition, the maturity number and the interest paid on PPF are both tax-exempt.

2.Risk-free investment option: PPF is a scheme sponsored by governments and guarantees risk-free returns. The market volatility does not affect the PPF rate, and the returns are guaranteed by the government.

3.Part withdrawal facilities: PPF is a retirement corpus building commodity and has a lock-in duration of 15 years, which can be extended in 5-year chains. PPF also provides partial withdrawal benefits which can be made after 5 years. For eg, if you opened an account on April 1st (FY 2012-2013), the balance can be withdrawn from (FY 2019-2020).

4.PPF loans benefit: Another important advantage of PPF is that loans may be made available against your PPF balance between year 3 and year 5. If the previous loan is entirely repaid, you can also take out a second loan before the 6th year. At the end of the second year, you can use a loan of up to 25 percent of the balance.

5.Flexible deposit options: You can deposit any amount that can be in installments or lump sum into your PPF account. You can make up to 12 installments in a year, and you can start your investment with just as little as Rs.100. Investing before the 5th of each month to optimize the benefits.

6.Higher interest rates: The PPF offers a higher interest rate relative to fixed deposits. The PPF interest rates are compounded quarterly and are based on the lowest equilibrium between the 5th day of the month and the last day. Investment above 1.5 lakhs would neither gain any interest nor count for tax savings.

You will still enjoy the PPF benefits after the maturity of your PPF account by extending the term for a maximum of 5 years. The other choice is to waive the whole sum and invest in some other commodity.

  1. Small savings, good returns: The PPF gives you a lot of flexibility on the size of the investment. An account can be opened with as little as Rs. 100. You should spend at least Rs. 500 per year, and at most Rs. 1,50,000. Those investments can be made in a series of 12 installments or as a lump sum. The PPF currently provides an interest rate of Rs. 7.6 percent, compounded annually (as of June 30, 2018).


Public Provident Fund (PPF) scheme is a common long-term investment option backed by the Indian government that provides protection with favorable interest rates and fully tax-exempt returns. Investors may receive facilities such as loaning, withdrawal, and account extension.

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