Public Provident Fund (PPF) – returns calculator and benefits in 2023

Know details about what is Public Provident Fund (PPF) is. Check eligibility criteria, interest rates, and tax-saving details | Advantages and disadvantages

This post was most recently updated on December 23rd, 2022

When it comes to investment Public provident fund (PPF) is the preferred choice for many Indian investors. PPF is seen as the safest investment option giving excellent returns. It also qualifies for tax savings under section 80C which makes it more attractive. Furthermore, gains from PPF are also tax exempted which is the biggest benefit of investing in PPF.

In this article, let’s explore what is PPF, the current interest rate, and eligibility criteria and see whether it makes sense to invest in PPF.

Consider reading – EPF vs PPF vs VPF vs GPF

Public Provident Fund
Public Provident Fund / PPF

What is a Public provident fund (PPF)?

PPF is a great investment choice for investors who are looking for safe and secure investment returns.

PPF is popular among investors who are conservative and are worried about the security of their investments.

PPF is managed by PFRDA. The PPF scheme offers an attractive rate of interest and it is tax exempted from the gains that you make from interest. Apart from EPF, VPF, and NPS – PPF is a very popular investment option among Indian citizens.

Eligibility to open a Public Provident Fund (PPF) account

The eligibility criteria to open a PPF account are mentioned below:

  • All Indian citizens are eligible to open a PPF account.
  • An individual can open only one account under his/her name. However, another account can be opened by the individual on behalf of a minor.
  • Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not allowed to open a PPF account.

How to open a Public Provident Fund (PPF) account?

Individuals can open a PPF account at any bank which offers PPF service or at post offices. The documents required to open a PPF account are mentioned below:

  • The application form.
  • ID proof such as an Aadhaar card, Permanent Account Number (PAN) card, passport, etc., must be submitted.
  • Address proof with the current address mentioned on it should be submitted.
  • Signature proof.
  • After submission of the above documents, the amount that is required to open a PPF account can be deposited.

Consider reading – Post office schemes

What are the features of a Public Provident Fund (PPF) account?

The main features of the Public Provident Fund (PPF) account are mentioned below:

  • Duration of the PPF account: The minimum duration of a PPF account is 15 years. Account holders can extend the duration of the account by a block of 5 years.
  • What is the minimum amount required to open a PPF account: – The amount that is required to open a PPF account is Rs.100. In a year, if the annual investment that is made towards the account exceeds Rs.1.5 lakh then no interest will be earned on the excess amount, and no tax deductions can be claimed as well.
  • An individual can open only one PPF account under his/her name. Under the PPF scheme, joint accounts cannot be opened.
  • The minimum and maximum investments that can be made in a financial year are Rs.500 and Rs.1.5 lakh, respectively. PPF Investments can be paid in a lump sum or in installments. The maximum number of installments that are allowed is 12.
  • Deposits must be made at least once a year for 15 years.

Looking for safe and best investment options; have a look at 13 safe investments with high returns in India

Advantages of Public Provident Fund (PPF)

Here are some advantages of the Public Provident Fund (PPF):

  1. Guaranteed returns: The PPF offers a guaranteed rate of interest, which is set by the Government of India. This can provide a stable and secure source of income for those looking to save for their long-term financial needs.
  2. Long-term investment option: The PPF has a maximum policy term of 15 years, which can be extended for a further 5 years. This can be a good option for those looking for a long-term investment to support their future financial goals.
  3. Tax benefits: The PPF offers tax benefits on both the investment and the interest earned, with the investment eligible for tax deductions under Section 80C of the Income Tax Act and the interest earned tax-free.
  4. Security: The PPF is backed by the Government of India, which provides a level of security and stability for investment.
  5. Flexibility: The PPF offers flexibility in terms of the investment amount, allowing investors to choose the option that best meets their needs.

Disadvantages of Public Provident Fund (PPF)

While the Public Provident Fund (PPF) can be a convenient and secure investment option, it also has some disadvantages to consider:

  1. Low returns: The PPF offers a fixed rate of interest, which may be lower than other investment options such as mutual funds or stocks. This means that the returns on the PPF may not keep pace with inflation, which can erode the value of your investment over time.
  2. Long lock-in period: The PPF has a long lock-in period of 15 years, which can be extended for a further 5 years. This can be a disadvantage for those who may need access to their funds before the end of the lock-in period.
  3. Limited flexibility: The PPF is a fixed investment, which means that you cannot make additional contributions or change the investment amount once it is set. This can be a disadvantage for those who may want more flexibility in their investments.
  4. Investment limit: The PPF has a maximum investment limit of INR 1.5 lakh per year, which may not be sufficient for those with larger investment needs.
  5. Age limit: The PPF is only available to individuals who are at least 18 years old, which may not be suitable for those who are younger or older.

Premature closure of Public Provident Fund (PPF)

While the Public Provident Fund (PPF) has a long lock-in period of 15 years, which can be extended for a further 5 years, it is possible to close the account prematurely under certain circumstances. Here are some reasons for the premature closure of a PPF account:

  1. Health reasons: You can close your PPF account prematurely if you are suffering from a terminal illness or a critical illness, as certified by a competent medical authority.
  2. Higher education: You can close your PPF account prematurely to fund the higher education of yourself, your spouse, or your children.
  3. Purchase or construction of a house: You can close your PPF account prematurely to purchase or construct a house, or to repair or renovate an existing house.
  4. Marriage of a dependent: You can close your PPF account prematurely to fund the marriage of a dependent, such as a son, daughter, or grandchild.

To close your PPF account prematurely, you will need to submit a written request to the bank or post office where your account is held, along with any required documentation. The bank or post office will review your request and, if approved, will close the account and return the balance to you.

It’s important to note that premature closure of a PPF account may result in the loss of tax benefits and may also be subject to a penalty. It’s a good idea to carefully consider the implications of premature closure before making a decision.

What is the procedure for Public Provident Fund (PPF) Withdrawal?

Individuals can close the Public Provident Fund (PPF) account only after the completion of the 15 years. Once the 15 years are completed, the account holder can withdraw the entire amount that has been saved in the account as well as the interest that has been generated.

However, in case the account holders need funds, partial withdrawal of funds is available after the completion of 6 years of opening the account. The account holder can withdraw 50% of the funds that are available after the fourth year in case of PPF premature withdrawal. It can either be at the end of the preceding year or the year before which the amount is withdrawn, whichever is lower. However, account holders are allowed to make withdrawals only once a year.

Public Provident Fund (PPF) interest rate history

Here is the interest history of the Public Provident Fund (PPF):

YearRate of Interest
From 1 July 2019 to 31 December 20197.90%
From 1 October 2018 to 30 June 20198.00%
From 1 January 2018 to 31 September 20187.60%
From 1 July 2017 to 31 December 20177.80%
From 1 April 2017 to 30 June 20177.90%
From 1 October 2016 to 31 March 20178.00%
From 1 April 2016 to 30 September 20168.10%
From 1 April 2013 to 31 March 20168.70%
From 1 April 2012 to 31 March 20138.80%
From 1 December 2011 to 31 March 20128.60%
From 1 March 2003 to 30 November 20118.00%
From 1 March 2002 to 28 February 20039.00%
From 1 March 2001 to 28 February 20029.50%
From 15 January 2000 to 28 February 200111.00%
From 1 April 1999 to 14 January 200012.00%
From 1 April 1986 to 31 March 199912.00%
1985-8610.00%
1984-859.50%
1983-849.00%
1982-838.50%
1981-828.50%
1980-818.00%
1979-807.50%
1978-797.50%
1977-787.50%
1976-777.00%
1975-767.00%
From 1.8.1974 to 31.3.19757.00%
From 1.4.1974 to 31.7.19745.80%
1973-745.30%
1972-735.00%
1971-725.00%
1970-715.00%
1969-704.80%
1968-694.80%
PPF interest rate history

Online PPF calculator in excel sheet in 2023

You can easily calculate and create a strategy to invest in PPF by using this simple online PPF calculator excel sheet.

In the excel sheet; you can input how many years you want to invest in PPF, when you want to withdraw, the frequency of investment, etc. The online PPF calculator excel sheet will help you understand how much will be your Maturity amount, and interest amount.

Download the online Public Provident Fund (PPF) calculator excel sheet here.

FAQs on Public Provident Fund (PPF)

  1. Is the PPF account Safe?

    Public provident fund / PPF account offers risk-free, guaranteed returns, and capital protection as it is backed by the Government of India. Therefore, opening a PPF account comes with minimal risks.

  2. Can I take loans against a PPF account?

    Between the third and fifth financial year from the date of opening the PPF account, PPF loans can be availed against the account.

    The amount that can be availed as a loan is 25% of the investments that have been made at the end of the second financial year. Individuals can also avail of a loan after the sixth financial year as well. However, the first loan must be completely paid before availing of a second loan.

  3. What is the PPF Interest Rate in 2022?

    Currently, the rate of interest for the PPF account is 7.1% p.a. and it is compounded on an annual basis. The interest is paid on March 31 and the PPF interest rate is set by the Finance Ministry on a yearly basis.

    The calculation of interest is based on the minimum balance that is available between the close of the fifth day and the last day of the month.

  4. What are PPF Tax benefits?

    Investments that are made under a Public provident fund (PPF) account come under the Exempt-Exempt-Exempt (EEE) category. Therefore, under Section 80C of the Income Tax Act, all deposits made towards a PPF account are tax-exempt.

    The amount that has been saved as well as the interest that has been generated are also exempt from tax when the individual withdraws the amount from the PPF account.

  5. What is the lock-in period for PPF?

    A public provident fund (PPF) has 15 years of lock-in period from the day you start investing in it. However, if you need to withdraw money from your PPF account then you can do a premature withdrawal from the PPF account with certain conditions.

  6. Is PPF better than mutual funds?

    PPF and mutual funds are 2 different kinds of investment options. PPF, on one hand, provides safe secure, and guaranteed returns whereas equity mutual funds may provide higher returns compared to PPF in long run and have risks of losing capital associated with it.

    PPF has a lock-in period of 15 years which makes it il-liquid whereas most of the equity mutual funds are open-ended and can give you a lot of flexibility on liquidity.

  7. Can NRI open PPF account?

    If you are an NRI, You can not open a new PPF account. How ever, If you had a PPF account before you became an NRI then you can hold the PPF account until its maturity.

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