PPF (Public Provident Fund) is a popular saving as well as an investment scheme in India. It is an ideal investment option for risk-averse investors seeking long term wealth appreciation. Along with building a retirement corpus, it is also a significant tax saving investment.
Here are a few PPF advantages that make it a profitable investment scheme:

Tax benefits

PPF is and investment product that enjoys the benefit of EEE (exempt-exempt-exempt) tax model. Under section 80c, any contributions made to the PPF are tax-exempt up to 1.5 lakh per annum. Furthermore, the maturity amount and the interest received on PPF is also exempt from tax.

Risk-free investment option:

PPF is a government-backed scheme and ensures risk-free returns. The rate of the PPF are not affected by the market volatility and the returns are guaranteed by the government.

Partial withdrawal facilities

PPF is a product for building retirement corpus and has a lock-in period of 15 years, which can be extended in blocks of 5 years. PPF also comes with partial withdrawal benefits, which can be done after completion of 5 years. For instance, if an account was opened on April 1st (FY 2012-2013), the amount can be withdrawn from (FY 2019-2020).

PPF loans benefits

Another significant benefit of PPF is that you can avail loans against your PPF balance between the 3rd year and the 5th year. You can also take a second loan before the 6th year if the previous loan is fully repaid. You can avail loan up to 25% of the balance at the end of the second year.

Flexible deposit options

You can deposit any amount in your PPF account, which can be done in installments or lump sum. In a year, you can make a maximum of 12 instalments and you can start your investment with as little as Rs.100. To maximize the benefits invest before 5th of every month.

Higher interest rates

As compared to fixed deposits, PPF offers a higher interest rate. The PPF interest rates are compounded annually and are calculated on the lowest balance between the 5th day and the last day of the month. Investment above 1.5 lakhs will not earn any interest nor will not be eligible for tax savings.

After the maturity of PPF account you can still enjoy PPF benefits by extending the tenure for a period of 5 years. The other option is to withdraw the entire amount and invest in some other asset.

Learn more about your Pension Plans here.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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