31 August, 2023

PPF, Public Provident Fund, Basics, PPF Account Opening, Interest Rate, Withdrawal & Tax Benefits

Introduction to Public Provident Fund (PPF):

The Public Provident Fund (PPF) is a popular long-term savings and investment scheme in India, backed by the Government of India. It was introduced in 1968 to encourage individuals to save for their retirement while also providing them with tax benefits. PPF offers a secure and fixed return on investment, making it an attractive option for risk-averse investors.

PPF Account Opening:

1. Eligibility: Any resident Indian individual can open a PPF account. Parents can also open accounts for their minor children.

2. Application: PPF accounts can be opened at designated post offices, select public sector banks, and authorized branches of private sector banks. The account opening form needs to be filled out, along with KYC documents and passport-sized photographs.

3. Number of Accounts: An individual can open only one PPF account in their name, and a maximum of two accounts can be opened for minors by their parents/guardians.

4. Tenure: The initial tenure of a PPF account is 15 years. After the initial 15-year period, the account can be extended in blocks of 5 years each.

Interest Rate:

The interest rate on PPF is determined by the Government of India and is revised quarterly. The interest is compounded annually. Historically, PPF has provided returns higher than traditional savings accounts and fixed deposits.

As of my last knowledge update in September 2021, the interest rates were around 7% to 7.5%. However, these rates are subject to change, so it's essential to check with official sources for the most up-to-date rates.

Contributions and Withdrawals:

1. Contributions: A PPF account holder can deposit a minimum of ₹500 and a maximum of ₹1,50,000 in a financial year. Deposits can be made in lump sums or in up to 12 installments.

2. Partial Withdrawal: After the completion of the 6th year, account holders can make partial withdrawals, subject to certain conditions. The withdrawal amount is limited to a specific percentage of the balance at the end of the fourth year immediately preceding the year of withdrawal.

Tax Benefits:

1. Tax Deduction: Contributions made to a PPF account are eligible for tax deduction under Section 80C of the Income Tax Act, up to a limit of ₹1,50,000 per financial year.

2. Tax-Free Interest: The interest earned on the PPF account is entirely tax-free.

3. Maturity Proceeds: On maturity, the entire amount including the principal and accumulated interest is tax-free.

Nomination and Transfer:

PPF account holders can nominate a nominee to receive the proceeds in the event of their demise. Additionally, PPF accounts can be transferred from one authorized bank/post office to another without any charge.


The Public Provident Fund (PPF) is a reliable investment avenue for individuals looking for long-term savings with attractive tax benefits. With a fixed tenure, guaranteed returns, and flexibility in contributions and withdrawals, PPF remains a popular choice among investors in India. However, it's important to stay updated with the latest information on interest rates, rules, and regulations associated with PPF accounts.

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