Features and Benefits of PPF Scheme

Below you will find some of the key and important features of PPF Scheme:

PPF Interest Rates: PPF Scheme interest rates are decided by the Central Government of India. It is usually announced annually. The interest earned on PPF Account has compounded annually. The present rate of PPF Interest stands fixed at 8.1% per annum.

PPF Account Term: The PPF Account Term stands at 15 years. However, subscribers can continue their account beyond maturity for a block of 5 years at every renewal, with or without making any additional deposits. PPF Account Opening Amount: PPF Account can be opened with a sum of Rs.100.

Annual Deposit Amount: As per the present Government directive, the annual deposit amount is between Rs.500 to Rs.1.5 Lakhs. If a subscriber does not deposit the minimum annual investment, his PPF Account will be rendered inactive.

Deposit Frequency: In a PPF Account, the deposit has to be done every year. The maximum deposit frequency is 12 installments.

Deposit Modes: Deposits in PPF Account can be made by cash, cheque, PO, DD, or online funds transfer.

Withdrawals: Complete withdrawal of funds in a PPF Account can be made only at maturity. However, partial withdrawals are allowed from the 7th year of running a PPF Account (subject to other conditions).

Nomination: PPF Account comes with Nomination facility which can be done at the time of opening the Account or after that.

Funds Transfer: Funds transfer is not allowed between people but can be transferred between bank branches or post offices for free.

Loan Facility: Loan can be availed against funds held in the PPF Account from the 3rd to 6th Year.

Joint Accounts: Joint Accounts are not allowed.

Some of the Key Benefits of having PPF Account are as follows:

PPF Accounts offer attractive long-term investments option: PPF Accounts serve long-term investment goals. It comes with a deposit period of 15 years and lock-in period of 7 years, making it a viable long-term investment medium. Moreover, interest rates in PPF Accounts have compounded annually which makes it a better investment option than bank FDs.

PPF Accounts offer Tax Advantage: Interest earned on PPF Deposits is tax-free. Plus, deposits made in PPF Account are tax deductible under section 80C of the Income Tax Act. Withdrawals are also exempted from Wealth Tax. Retirement Planning Tool: PPF Accounts serve as retirement planning tool. Capital protection, tax benefits, long-term investment, and compounded interest are just a few of the reasons which go on to make it a superb retirement planning investment option.

Low Risk: The Indian Central Government promotes PPF Accounts; hence they have a low risk of default.

Easy Accessibility: PPF Accounts can be easily opened at any of the nationalized, public sector banks or post offices or even at some selected private sector banks. All of these avenues have a wide reach making it easy for people to open and maintain their PPF Accounts according to their convenience.

No Attachments: The PPF Account Funds cannot be attached under court order; neither any creditor can claim it.


Here are some of the most Frequently Asked Questions about PPF (Public Provident Fund)

Q. What is the current PPF interest rate?

The Government of India establishes the interest rate on PPF Account. The present interest rate on PPF Account is 8.1% P.A. (compounded annually) Which is effective from 1st April 2016. It was revised from 8.7% which was effective from 1st April 2013. The interest is paid on 31st March every year.

Q. What are PPF Maturity Options?

A subscriber to PPF Account is given three options once the maturity period gets over.

  • 1. Complete withdrawal of fund.
  • 2. Extend the PPF Account without Annual Contribution – This option is activated automatically if a subscriber to PPF Account does not take any action within one year of his PPF Account maturity. One withdrawal is permitted in a given financial year. However, any amount from the PPF Fund can be withdrawn under this option. The balance amount in the PPF Fund keeps earning interest.
  • 3. Extend the PPF Account with Contribution – to activate this option, a subscriber needs to deposit Form H with the bank where he is having his PPF Account within one year from the date of maturity of his PPF Account. This option allows him to put money in his PPF Account after extension. This option allows the subscriber to withdraw up to 60% of the PPF Fund that was available in his PPF Account at the beginning of the extension period. Only one withdrawal is permitted in a single year.
Q. Withdrawals from PPF Account

PPF Scheme comes with a lock-in period of 15 years, and the whole money can only be withdrawn at the end of the maturity period, which is 15 years. The full amount that is withdrawn at the end of the maturity period is tax-free. However, premature withdrawals are also permitted from the end of the sixth financial year which is equal to 50% of the fund that stood in the PPF Account at the end of the 4th year of running PPF Account.

Q. What is the minimum lock-in period for PPF Account?

PPF Account comes with a minimum locking period of 15 years. However, partial withdrawals are permitted from the end of the sixth year of running PPF Account.

Q. Is PPF Interest Taxable in India?

Interest received on PPF Deposits is Tax-Free in India. Contributions made towards PPF Account qualify for Tax Rebate under section 80C. Moreover, Tax Bracket for PPF Account is EEE (i.e. Exempt, Exempt, Exempt). So, contributions made towards PPF Account are exempted u/s 80C, interest earned is exempted as well as withdrawal is also tax exempted.

Q. What is the Eligibility for opening PPF Account?
  • Resident Indians, 18 years or above are eligible to open a PPF Account and no upper age limit for opening PPF Account. A person can open only one PPF Account.
  • PPF Account can be opened for minors. However, Grandparents cannot open a PPF Account in the names of their minor grandchildren.
  • NonResident Indians (NRIs) cannot open a PPF Account. However, those people who have opened a PPF Account and later taken the NRI status are allowed to maintain their PPF Accounts until the maturity date, but they are not eligible for the extension option at maturity.
  • HUFs cannot open a PPF Account. This is effective from 2005.
  • Foreigners are not eligible for opening a PPF Account.