The Public Provident Fund also known as PPF, is a popular long-term investment option offered by the Indian Government. It offers a secure and guaranteed return on investment with tax benefits, making it an attractive option for many investors.
In this article, we will look into the Public Provident Fund in India, PPF Account features, PPF Withdrawal rules, eligibility criteria, advantages, disadvantages, interest rate history, and the latest interest rates.
We will also provide a free PPF Returns Calculator Excel Sheet to help you calculate your returns.
The latest PPF Interest Rate in 2023 is 7.1%.
Consider reading: EPF vs PPF vs VPF Vs GPF
Public Provident Fund (PPF) Key Details
|Eligibility||Available to all Indian residents|
|Investment Period||15 years (extendable in blocks of 5 years)|
|Minimum Contribution||Rs. 500 per year|
|Maximum Contribution||Rs. 1.5 Lakhs per year|
|Latest PPF Interest Rate||7.1%|
|Tax Benefits||Tax-exempt on contributions, interest earned, and maturity proceeds|
|Withdrawal||Partial withdrawals are allowed after the 7th year|
|Loan Facility||Available from the 3rd to the 6th year|
|Transferable||Can be transferred between banks and post offices|
Note: The interest rate is subject to change and may vary from year to year. Please check with the relevant authorities for the latest interest rate.
Additionally, the interest earned on PPF has compounded annually, providing higher returns over the long term.
PPF is a safe investment option, backed by the Government of India, and offers a good balance of risk and return.
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-exempt from the gains that you make from interest.
Apart from EPF, VPF, and NPS – PPF is a very popular investment option among Indian citizens.
Consider reading: What is Voluntary Provident Fund and its Features
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 and Latest Interest Rate Table
Public Provident Fund (PPF) Account Rules and Features?
The main Public Provident Fund (PPF) account rule and its features are mentioned below:
- A minimum yearly deposit of ₹ 500 is required to open and maintain a PPF account.
- A PPF account holder can deposit a maximum of ₹ 1.5 lacs in his/her PPF account per financial year.
- A loan facility is available from the 3rd financial year up to the 6th financial year.
- PPF Withdrawal is permissible every year from the 7th financial year.
- The government of India sets the interest rate every quarter. At the time of writing, the interest rate is 7.1% per annum.
- You can transfer your account from one branch to another or from one bank to another and from a post office to a bank and vice versa without any additional charge.
- You can nominate a person of your choice for your account either at the time of opening the account or subsequently.
- You can close your account and make a full withdrawal after the 5th FY for medical treatment of severe or life-threatening conditions for yourself and your family or for the purpose of higher education.
Looking for safe and best investment options? have a look at 13 safe investments with high returns in India
Tips for Your Public Provident Fund Investments
Here are some strategies for investing in Public Provident Fund (PPF):
- Open a PPF account with any Indian bank or post office. The account can be opened with a deposit as low as ₹ 500, and you can deposit up to ₹ 1.5 lacs within a financial year.
- Make sure to deposit funds before the 5th of each month to maximize the interest for that particular month. Despite the annual compounding of interest in a PPF account, the interest calculation is performed monthly. Hence, deposits made prior to the 5th are considered for that month’s interest, while those deposited later contribute to the following month’s interest.
- Adopt a consistent and regular investment approach to leverage the power of compounding. The more you invest and the longer the duration, the more returns you can expect from your PPF account. Investments can be made as a lump sum or divided into 12 monthly installments.
- Make the most of the tax deduction benefits provided under Section 80C of the Income Tax Act on your PPF investments. This allows you to claim up to ₹ 1.5 lacs as a deduction from your taxable income in a given financial year. The interest accrued and the maturity proceeds from your PPF account are also tax-exempt.
- After the initial 15-year period, consider extending your PPF account if you want to keep earning interest and enjoying tax benefits. Your PPF account can be extended for another 5 years with or without additional contributions. You can also make partial withdrawals from your extended account under certain circumstances.
- Ensure your PPF investment aligns with your financial objectives. Your PPF contribution should resonate with your financial aspirations. Once your goals are well-defined, you can quickly ascertain how much you need to save in your PPF account. For instance, if you require ₹ 25 lakhs in 15 years for your child’s education, an online calculator can help you determine the necessary annual PPF investment to reach that target.
Advantages of Public Provident Fund (PPF)
Here are some advantages of the Public Provident Fund (PPF):
- 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.
- 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.
- 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.
- Security: The PPF is backed by the Government of India, which provides a level of security and stability for investment.
- 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 of PPF to consider:
- 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.
- 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.
- 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.
- 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.
- 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.
Public Provident Fund (PPF) Withdrawal Rules
Individuals can close the Public Provident Fund (PPF) account only after the completion of 15 years.
Once the 15 years are completed, the account holder can withdraw the entire amount from PPF that has been saved in the account as well as the interest that has been generated.
However, in case the account holders need funds, a partial PPF 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 under the PPF premature withdrawal rule.
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 PPF withdrawals only once a year.
Public Provident Fund (PPF) Premature Closure Rules
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:
- 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.
- Higher education: You can close your PPF account prematurely to fund the higher education of yourself, your spouse, or your children.
- 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.
- 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.
Public Provident Fund (PPF) Interest Rate History
|Year||Rate of Interest|
|1st Apr 2020 to Till Date||7.10%|
|From 1 July 2019 to 31 March 2020||7.90%|
|From 1 October 2018 to 30 June 2019||8.00%|
|From 1 January 2018 to 31 September 2018||7.60%|
|From 1 July 2017 to 31 December 2017||7.80%|
|From 1 April 2017 to 30 June 2017||7.90%|
|From 1 October 2016 to 31 March 2017||8.00%|
|From 1 April 2016 to 30 September 2016||8.10%|
|From 1 April 2013 to 31 March 2016||8.70%|
|From 1 April 2012 to 31 March 2013||8.80%|
|From 1 December 2011 to 31 March 2012||8.60%|
|From 1 March 2003 to 30 November 2011||8.00%|
|From 1 March 2002 to 28 February 2003||9.00%|
|From 1 March 2001 to 28 February 2002||9.50%|
|From 15 January 2000 to 28 February 2001||11.00%|
|From 1 April 1999 to 14 January 2000||12.00%|
|From 1 April 1986 to 31 March 1999||12.00%|
|From 1.8.1974 to 31.3.1975||7.00%|
|From 1.4.1974 to 31.7.1974||5.80%|
Online Public Provident Fund (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 PPF Calculator Excel sheet, you can input how many years you want to invest in PPF, when you want to withdraw, the frequency of your investment, etc.
The online Free Public Provident Fund calculator Excel sheet will help you understand how much your maturity amount and interest amount will be.
Consider using the PPF Online Returns Calculator
Download the online Public Provident Fund (PPF) calculator Excel sheet here:
FAQs on Public Provident Fund (PPF)
Is the PPF account Safe?
A 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.
Can I take loans against a PPF account?
Loans against a PPF account can be taken between the third and fifth financial year from the account’s opening date. The loan amount is capped at 25% of the investments made by the end of the second financial year. Loans can also be accessed after the sixth year, but any prior loan must be fully repaid before taking out a second one.
What is the PPF Interest Rate in 2023?
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.
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.
What is the lock-in period for PPF?
A public provident fund (PPF) has 15 years 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.
Is PPF better than mutual funds?
PPF (Public Provident Fund) and mutual funds are distinct investment avenues. PPF offers secure and guaranteed returns, while equity mutual funds potentially yield higher returns over time but come with a capital loss risk. PPF’s 15-year lock-in period reduces liquidity. In contrast, most equity mutual funds are open-ended, providing greater flexibility regarding liquidity.
Can NRI open a PPF account?
If you are an NRI, You can not open a new PPF account. However, If you had a PPF account before you became an NRI then you can hold the PPF account until its maturity.
What is the Public Provident Fund?
The Public Provident Fund (PPF) is a popular savings and tax-saving option offered by the National Savings Institute of the Ministry of Finance in India. Launched in 1968, PPF enables individuals to invest their small savings and avail of reasonable returns along with income tax benefits. It aims to encourage long-term financial planning and security for individuals.
How much will I get after 15 years in PPF?
The amount you will receive after 15 years in a Public Provident Fund (PPF) depends on the interest rate and the amount you invested. To calculate the final amount, use the formula: A = P(1+r)^n, where A is the final amount, P is the principal amount, r is the annual interest rate, and n is the number of years. Consider using an online PPF calculator to get an accurate estimate.
Which is better PPF or FD?
PPF is ideal for those seeking long-term savings, tax benefits, and a safe investment. Conversely, Fixed Deposits (FDs) provide greater flexibility and liquidity, fitting for those who might need short-term access to their funds.
What is the benefit of PPF?
A key benefit of a PPF account is its tax benefits. It provides total tax exemption and deductions under section 80C of the Income Tax Act. Given its guaranteed returns and tax-free investment value, PPF stands out as an extremely tax-efficient investment choice.