What is PPF ?


In India, when it comes to long-term savings and investments, the Public Provident Fund (PPF) is one of the most popular options among individuals. It is a government-backed savings scheme that offers attractive interest rates, tax benefits, and a secure investment avenue. This blog aims to provide a comprehensive guide to PPF in India, covering its features, eligibility criteria, account opening process, contribution limits, tax benefits, withdrawal rules, and much more. Let's delve into the details and understand why PPF is considered a preferred choice for long-term financial planning.

What is PPF?

The Public Provident Fund (PPF) is a savings scheme initiated by the Government of India. It was introduced in 1968 with the objective of promoting a habit of long-term savings among individuals and providing them with a secure retirement corpus. PPF is governed by the Public Provident Fund Act, 1968, and is regulated by the Ministry of Finance.

Features of PPF

The PPF scheme offers several attractive features that make it a preferred choice for individuals looking for long-term savings options. Some key features of PPF include:

a) Tenure: The PPF scheme has a fixed tenure of 15 years, which can be extended in blocks of 5 years after maturity.

b) Interest Rate: The interest rate on PPF is determined by the government and is subject to change periodically. It is currently compounded annually and is tax-free.

c) Tax Benefits: Contributions made towards PPF are eligible for tax deductions under Section 80C of the Income Tax Act, up to a specified limit. The interest earned and the maturity amount are also tax-exempt.

d) Flexibility: PPF allows individuals to contribute any amount between the minimum and maximum limits each year, providing flexibility based on their financial situation.

Eligibility and Account Opening Process

To open a PPF account in India, individuals must meet certain eligibility criteria. Any Indian citizen can open a PPF account, including minors, while non-resident Indians (NRIs) are not eligible. The account can be opened in designated post offices, nationalized banks, or authorized private banks. The account opening process typically involves the following steps:

a) Documents Required: To open a PPF account, individuals need to submit the PPF account opening form, identity proof, address proof, and two passport-sized photographs.

b) Account Type: Individuals can open either an individual PPF account or an account on behalf of a minor.

c) Initial Deposit: The PPF account requires a minimum initial deposit, which is subject to change. The current minimum deposit is Rs. 500.

d) Nomination: Nomination is an essential aspect of the PPF account. Individuals are required to nominate one or more persons who will receive the accumulated corpus in case of their demise.

Contribution Limits and Rules

PPF has specific contribution limits and rules that need to be adhered to. Some important points to note include:

a) Annual Contribution: The minimum annual contribution for a PPF account is Rs. 500, while the maximum limit is Rs. 1.5 lakh. Contributions can be made in multiple installments or as a lump sum.

b) Number of Contributions: A maximum of 12 contributions can be made in a financial year, i.e., from April 1 to March 31.

c) Deposits: Deposits can be made through cash, check, demand draft, or online transfers.

d) Extension of Tenure: After the completion of 15 years, individuals have the option to extend their PPF account for a block of 5 years without making any further contributions.

Tax Benefits of PPF

One of the major advantages of investing in PPF is the tax benefits it offers. The tax benefits associated with PPF include:

a) Tax Deductions: Contributions made towards PPF are eligible for tax deductions under Section 80C of the Income Tax Act, up to a maximum limit of Rs. 1.5 lakh.

b) Tax-Free Interest: The interest earned on PPF is fully exempt from income tax. The interest is compounded annually and added to the account balance.

c) Tax-Free Maturity Amount: The maturity amount, including the principal and accumulated interest, is completely tax-free.

Withdrawal Rules and Partial Withdrawals

PPF has certain withdrawal rules and provisions that individuals should be aware of. These include:

a) Lock-in Period: The PPF account has a lock-in period of 15 years. Partial withdrawals can be made from the 7th year onwards.

b) Withdrawal Limits: The maximum amount that can be withdrawn in a financial year is capped at 50% of the balance at the end of the 4th preceding year or the balance at the end of the previous year, whichever is lower.

c) Loan Facility: After the completion of the third financial year, individuals can avail of a loan against their PPF account. The loan amount can be up to 25% of the balance at the end of the 2nd financial year preceding the year in which the loan is applied for.

d) Premature Closure: In certain exceptional cases, such as medical emergencies or higher education expenses, individuals can opt for premature closure of their PPF account. However, premature closure is subject to specific conditions and penalties.


The Public Provident Fund (PPF) scheme in India offers individuals an attractive long-term savings option with tax benefits and a secure investment avenue. It encourages disciplined savings and provides a reliable source of funds for retirement or other financial goals. Understanding the features, eligibility criteria, account opening process, contribution limits, tax benefits, withdrawal rules, and other related topics is crucial for individuals considering PPF as a part of their financial planning. By leveraging the benefits of PPF, individuals can build a substantial corpus and enjoy the peace of mind that comes with secure and tax-efficient savings.

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