What is PPF and Why is it One of India's Best Investments?

Public Provident Fund (PPF) is a long-term savings scheme backed by the Government of India, offering guaranteed returns with complete tax exemption. PPF follows the EEE (Exempt-Exempt-Exempt) tax structure - contributions are deductible under Section 80C, interest earned is tax-free, and the maturity amount is completely exempt from income tax. This triple tax benefit makes PPF one of the most tax-efficient investment options in India. Considering surrendering an LIC traditional policy to redeploy into PPF? See our LIC Surrender Value Calculator for the IRDAI floor estimate first - and remember surrender within 2 years reverses prior 80C deductions on the LIC premiums.

The current PPF interest rate is 7.1% per annum, compounded annually and set by the government each quarter. PPF has a lock-in period of 15 years, after which it can be extended in blocks of 5 years. Partial withdrawals are allowed from the 7th year onwards, and loans against PPF balance are available from the 3rd to 6th year.

You can invest a minimum of Rs.500 and a maximum of Rs.1,50,000 per financial year in PPF. Investments must be made in at least one instalment per year to keep the account active.

Key Features of PPF

• Lock-in: 15 years (extendable in 5-year blocks)
• Interest rate: 7.1% p.a. (reviewed quarterly)
• Tax benefit: EEE - fully tax exempt
• Investment limit: Rs.500 to Rs.1,50,000 per year
• Partial withdrawal allowed from 7th year
• Safe - sovereign guarantee by Government of India