Sovereign Backed
Public Provident Fund (PPF)
Verified Indian financial mathematics, statutory regulations, and step-by-step actionable breakdowns.
Expected Yield7.1% p.a.
Lock-In Tenure15 Years (Partial after 5 yrs)
Risk LevelZero Risk
Tax StatusEEE
Overview & Statutory Background
The Public Provident Fund (PPF) is an Indian government-backed savings scheme designed to mobilize small savings while offering guaranteed returns and the coveted triple-tax-exempt (EEE) status. Backed by a statutory sovereign guarantee from the Government of India, capital and accrued interest carry zero credit risk.
Key Features & Operational Guidelines
Minimum deposit ₹500/yr, Maximum ₹1,50,000/yr per financial year
Compounded annually; interest computed monthly on lowest balance between 5th and end of month
Tenure of 15 years, extendable indefinitely in 5-year blocks with or without fresh contributions
Loan facility available from 3rd to 6th financial year at 1% above PPF interest rate
Partial withdrawals permitted after 5 completed financial years up to 50% of 4th preceding year balance
Cannot be attached by any court decree or liability under Indian law
Who is Eligible to Invest?
- •Any resident Indian citizen can open 1 PPF account in their own name
- •Parents/guardians can open an additional account on behalf of a minor child
- •NRIs and HUFs cannot open new PPF accounts (existing accounts prior to NRI status run till maturity)
Indian Taxation Breakdown
| Stage | Tax Treatment |
|---|---|
| Initial Investment | Eligible for Section 80C tax deduction up to ₹1.5 Lakhs (Old Tax Regime) |
| Interest & Returns | 100% tax-free under Section 10(11) in both Old and New Tax Regimes |
| Maturity / Withdrawal | Entire maturity proceeds are 100% tax-free under Section 10(11) |
Advantages & Limitations
Key Advantages (Pros)
- ✓Absolute sovereign capital protection guaranteed by Government of India
- ✓Triple tax-exempt (EEE) status delivers exceptional real post-tax yield
- ✓Protection from court attachment ensures your retirement safety net remains intact
- ✓5-year block extension flexibility lets wealth compound for 25-35 years
Important Limitations (Cons)
- ✕15-year lock-in period limits short-term emergency liquidity
- ✕Strict ₹1.5 Lakh annual maximum contribution cap
- ✕Interest rate reviewed quarterly by the Ministry of Finance
Public Provident Fund (PPF) FAQs
Always deposit between the 1st and 5th of the month. PPF interest is calculated on the minimum balance maintained between the close of the 5th day and the end of that calendar month. Depositing on or before the 5th ensures you earn interest for that entire month.
Calculate Compound Returns
Use our interactive calculators to simulate exact growth schedules for this asset.