What is PPF? (Public Provident Fund)
A **Public Provident Fund (PPF)** is a long-term, government-backed savings scheme in India. It offers tax-free returns, guaranteed growth, and disciplined wealth-building over a 15-year horizon, ideal for long-term goals like retirement or education planning.
PPF in Plain English
PPF is a long-term, government-guaranteed savings account. You contribute annually, interest is compounded yearly, and the total corpus at maturity is tax-free. It encourages disciplined savings and provides a secure route for wealth creation.
Benefits of PPF
- Government-backed and risk-free returns.
- Tax-free interest and principal under Section 80C.
- Compounded annually for long-term growth.
- Flexible withdrawals after 5 years for partial liquidity.
- Option to extend beyond 15 years in 5-year blocks.
- Encourages disciplined, long-term savings habit.
Who Should Consider PPF?
Ideal for individuals seeking **long-term, safe, tax-efficient savings**. Suited for salaried employees, self-employed individuals, and parents planning for children’s education or retirement planning.
How PPF Works
Choose Annual Deposit
Decide how much you want to invest annually (₹500 minimum, up to ₹1.5 lakh) in your PPF account.
Select Tenure
PPF has a 15-year lock-in period with extension options. Your investment grows tax-free over time.
Interest is Compounded
Interest is compounded yearly on the minimum balance between 5th and last day of the month.
Guaranteed & Safe
PPF is backed by the Government of India, offering safe and predictable returns for long-term goals.
PPF Variants & Options
Standard PPF Account
15-year tenure, minimum ₹500 annual deposit, tax-free interest, extendable in 5-year blocks.
Minor PPF Account
PPF account for minors managed by guardians; same benefits, long-term savings habit.
Employee PPF (EPF-linked)
Linked PPF options for salaried individuals; contribution may include employer part.
PPF Interest Example
Suppose you deposit ₹1,50,000 annually into a PPF account for 15 years at an annual interest rate of 7.1%. Interest compounds yearly on the minimum monthly balance, and the total corpus at maturity is completely tax-free.
Use our PPF Calculator for precise calculations based on your contribution and interest rate.
Tips & Common Mistakes
Start Early
The earlier you start, the more you benefit from compounding over the 15-year tenure.
Maximize Annual Contribution
Invest up to ₹1.5 lakh each year to fully utilize tax-free growth and exemptions under Section 80C.
Plan Withdrawals Wisely
Partial withdrawals allowed after 5 years; plan strategically for goals without breaking the account.
Use Auto-Debit
Set up auto-debit from your bank account to ensure timely contributions every year.
Consider Extensions
After 15 years, extend PPF in 5-year blocks to continue tax-free growth and compound interest benefits.
Important Notes
- PPF deposits qualify for Section 80C tax deduction (up to ₹1.5 lakh).
- Maturity period is 15 years; extensions allowed in 5-year blocks.
- Partial withdrawals allowed after 5 years under specified limits.
- Interest is fully tax-free.
- Maintain minimum ₹500 annual deposit to keep account active.