The Public Provident Fund (PPF) is a government-backed, long-term investment scheme aimed at promoting savings while providing attractive returns. It is one of the most preferred investment options in India due to its tax benefits and safety. The PPF scheme is governed by the PPF rules under the Ministry of Finance and offers a fixed PPF returns rate set by the government every quarter.
PPF interest compounds annually but is calculated monthly. The government sets the PPF return rate and revises it quarterly. Banks calculate interest on the lowest balance between the 5th and the last day of each month.
A=P*(1+r)n-1\r
Where:
To maximize returns, investors should make deposits before the 5th of every month to ensure they get the best interest calculation on their balance.
You may also want to know Bhamashah Yojana
Over the years, PPF return rates have fluctuated based on government policies. Below is a comparison of the historical PPF return rates:
| Year | PPF Interest Rate |
| 2010-2011 | 8.0% |
| 2012-2013 | 8.8% |
| 2015-2016 | 8.1% |
| 2018-2019 | 7.9% |
| 2020-2021 | 7.1% |
| 2023-2024 | 7.1% |
While PPF return is not market-linked, they provide a steady and risk-free return to investors.
| Features | PPF | Bank FD |
| Interest Rate | 7.1% (Variable) | 5%-7% (Fixed) |
| Tax Benefit | Yes (EEE scheme) | Only on 5-year tax-saving FDs |
| Lock-in Period | 15 years | 5 years (for tax-saving FDs) |
| Risk Factor | Very Low | Low |
Conclusion: PPF offers better long-term tax benefits than bank FDs, making it a preferred investment for retirement savings.
| Features | PPF | NPS |
| Returns | 7.1% (Fixed) | 8%-12% (Market-Linked) |
| Tax Benefit | EEE (Fully Tax-Free) | Partial Tax Benefit (Only 40% tax-free at withdrawal) |
| Lock-in Period | 15 years | Till retirement (60 years) |
| Risk | Risk-Free | Market-Linked Risk |
Conclusion: While NPS offers higher returns, PPF is entirely tax-free and safer.
| Features | PPF | ELSS |
| Returns | 7.1% (Fixed) | 12%-15% (Market-Linked) |
| Lock-in Period | 15 years | 3 years |
| Tax Benefit | Fully Exempt | Partial Exemption (Under LTCG rules) |
| Risk Factor | No Risk | Market Risk |
Conclusion: ELSS can provide higher returns but comes with market risk, whereas PPF is safer with guaranteed returns.
PPF follows the EEE (Exempt-Exempt-Exempt) model, making it one of the most tax-efficient investment options:
No, the PPF return is not taxable. The entire amount, including principal and interest, remains tax-free at maturity.
You may also want to know SBI NPS
A Public Provident Fund account can be opened at:
Documents Required:
The Public Provident Fund (PPF) remains one of the best long-term, tax-free investment options for individuals seeking stable returns and financial security. While alternatives like ELSS and NPS offer higher potential returns, PPF guarantees safety and steady growth, making it a preferred choice for retirement planning and wealth accumulation.
As of 2024, the PPF interest rate is 7.1%, revised quarterly by the government.
Interest is calculated monthly but compounded annually, based on the lowest balance between the 5th and last day of the month.
Partial withdrawals are allowed after 7 years, but full withdrawal is only permitted after 15 years.
Yes, PPF offers higher post-tax returns and tax benefits under Section 80C, making it more attractive than a bank FD.
Yes, PPF accounts can be extended in blocks of 5 years with or without fresh contributions.
The minimum investment is INR 500, and the maximum limit is INR 1.5 lakh per year.
No, a person can hold only one PPF account under their name.
No, PPF offers fixed, risk-free returns, unlike market-linked instruments like mutual funds or NPS.
Get the link to download the App
