What Is PPF? A Complete Guide to Public Provident Fund
PPF (Public Provident Fund) is one of India's most popular long-term savings instruments. Backed by the government, it offers guaranteed, tax-free returns with the safety of sovereign backing.
Key Features of PPF
Tenure: 15 years (extendable in 5-year blocks). Interest rate: Set quarterly by the government (currently around 7.1%). Investment limit: ₹500 to ₹1.5 lakh per year. Tax benefit: EEE status — investment, interest, and maturity are all tax-free.
PPF vs Other Investments
PPF vs FD: PPF wins on tax efficiency (FD interest is taxable). PPF vs ELSS: ELSS offers higher potential returns but with market risk and shorter lock-in (3 years). PPF vs NPS: NPS has higher growth potential but 40% must buy annuity at retirement.
Withdrawal and Loan Rules
Partial withdrawal allowed from 7th year (up to 50% of balance). Loan facility available from 3rd to 6th year at PPF rate + 1%. Premature closure only after 5 years for specific reasons (medical emergency, higher education).
Maximizing PPF Returns
1) Invest before the 5th of each month. 2) Invest the full ₹1.5 lakh limit. 3) Invest as early in the financial year as possible. 4) Extend beyond 15 years if you don't need the money. 5) Open for your child to save additionally.