let us see about Public provident fund investment scheme in India below in detailed
The Public Provident Fund (PPF) is a government-backed savings scheme in India, launched in 1968 by the National Savings Institute, offering secure, long-term investment with a 15-year tenure, 7.1% annual interest rate for FY 2025-26 (compounded yearly), and complete EEE tax benefits—(EEE means 1.Exemptions on investments up to ₹1.5 lakh under Section 80C, 2.Exemption on interest earnings, and 3.Exemption on maturity proceeds. Designed for risk-averse investors across all ages and employment statuses, it provides capital protection, partial liquidity after 7 years, and is perfect for retirement or family wealth building.
Where Should I Apply for a PPF Account?
Open PPF accounts easily at these authorized locations with simple KYC documents (Aadhaar, PAN, photo, address proof).
- Post Offices: All head and sub-post offices across India, ideal for rural access, cash deposits accepted.
- Nationalized Banks: SBI, PNB, Bank of Baroda, Central Bank, Union Bank—any branch.
- Scheduled Commercial Banks: HDFC, ICICI, Axis, Kotak, Yes Bank designated branches.
- Online via Net Banking: SBI, ICICI, HDFC portals using Aadhaar eKYC for instant setup (no branch visit).
- Documents Required: Form-1, PAN, Aadhaar, 2 photos, nominee details, minors need guardian ID.
- Deposit Methods: Cash/cheque at branch, NEFT/UPI/online transfer, passbook issued for tracking.
Guardian opens for minors, transfer accounts between banks/post offices anytime.
Eligibility Criteria
PPF welcomes nearly all Indian residents, regardless of age, job, or income, for inclusive family savings.
- Kids (Minors under 18): Parents/legal guardians open and operate, child controls at 18(PAN card of parent/guardian).
- Youth/Adults (18+): Students, employed, self-employed, homemakers all qualify(PAN card is must).
- Unemployed: Jobless youth, homemakers, or gap-year individuals—no salary proof needed(PAN card is must).
- Senior Citizens (60+): No age cap, ideal for retirees (PAN card is must).
One primary adult account per PAN, minors tie to guardian’s ₹1.5 lakh limit.
Who is Not Eligible
Restrictions ensure focus on resident individuals.
- NRIs: Cannot open new accounts, existing ones continue till maturity without fresh deposits.
- Foreign Citizens/PIO/OCI: Unless Indian resident.
- Multiple Adult Accounts: Only one per person, second accounts are invalid, with excess deposits forfeited.
- Joint Accounts: Not permitted, Individual/guardian only.
- Institutions: Trusts, societies, companies, or firms cannot open accounts(only individuals).
Example
In a family of 6—Father (PAN: ABCDE1234F), Mother (PAN: FGHIJ5678K), and 4 kids (ages 3, 6, 9, 12)—each adult gets one PAN-based ₹1.5 lakh annual limit across their personal account + any kids’ accounts they operate as guardian.
Key Rule: Limit is combined per PAN group, not per account—split wisely to avoid excess deposits being forfeited without interest.
Father’s Group (PAN: ABCDE1234F) – Handles 2 Kids
- Father’s personal account: ₹50,000/year
- Kid 1’s account: ₹50,000/year
- Kid 2’s account: ₹50,000/year
- Total for Father’s PAN: ₹1.5 lakh/year (maxed out)
There is no rule to share equally, they can share investment amount as they like but the total investment under a single PAN account should be only till ₹1.5 lakh/year(min ₹500/year to max ₹1.5 lakh/year).
Mother’s Group (PAN: FGHIJ5678K) – Handles Other 2 Kids
- Mother’s personal account: ₹50,000/year
- Kid 3’s account: ₹50,000/year
- Kid 4’s account: ₹50,000/year
- Total for Mother’s PAN: ₹1.5 lakh/year (maxed out)
There is no rule to share equally, they can share investment amount as they like but the total investment under a single PAN account should be only till ₹1.5 lakh/year(min ₹500/year to max ₹1.5 lakh/year)
Key Features
- Interest Rate: 7.1% p.a. for FY 2025-26 (Q3), reviewed quarterly, compounded annually on March 31.
- Tenure: 15 years from April of opening year, extendable in 5-year blocks post-maturity indefinitely.
How Interest Works in PPF
- Interest Rate: Set by the government quarterly, current rate is 7.1% p.a. for FY 2025-26.
- Compounding Frequency: Interest compounds annually on March 31st of each financial year.
- Calculation Basis: Interest is calculated monthly on the lowest balance between the 5th and the end of each month.
- Crediting: Total interest earned during the year is credited yearly at maturity or each March 31.
- Taxation: Interest earned is completely tax-free under the EEE (Exempt-Exempt-Exempt) regime.
- Impact of Deposits Timing: Depositing before the 5th of any month earns interest for that entire month, deposits after the 5th earn from the next month.
- No Risk: Returns are guaranteed by the government, ensuring principal safety with consistent growth
How to calculate ?
Calculate using PPF calculator
👉 Example 1:Full ₹1.5 Lakh at Year Start (Lump sum type – Earns higher maturity because the full amount earns interest for the entire year)
Total tenure: 15 years
Result: Maturity ≈ ₹40.86 lakhs (Principal ₹22.5L + Interest ₹18.36L)
👉 Example 2: Split ₹1.5 Lakh (Monthly deposits in 12 months (12500*12=1,50,000) before 5th of each month)
Total tenure: 15 years
Result: Maturity ≈ ₹40.17- 40.18 lakhs (Principal ₹22.5L + Interest ₹17.67L)(slightly less due to timing)
👉 Example 3: Hybrid 1.5 lakh (₹90,000 lump sum at start + ₹10,000 monthly for 6 months)
Tenure : 15 years
Result: Maturity ≈ ₹40.44 lakhs (Principal ₹22.5L + Interest ₹17.94L)
Loans, Withdrawals & Extensions (Flexibility)
Loans from PPF
- When? Between 3rd and 6th year of your account.
- How much? Up to 25% of the balance at the end of the 2nd year before you take the loan.
- Repay? Within 3 years, with interest (1% higher than PPF rate).
👉 Example: You opened a PPF in April 2024.
- By March 2026, your balance is ₹1,00,000.
- In 2027 (your 4th year), you can take a loan of ₹25,000 (25% of ₹1,00,000).
Withdrawals from PPF
- When? From the 7th year onwards.
- How much? Up to 50% of the balance at the end of the 4th year before withdrawal (OR) last year’s balance(balance at the end of Year 6 (2024–25), whichever is lower.
- Limit: Only one withdrawal per year.
👉 Example: You opened a PPF in April 2019.
- In 2025-26 (7th year), your balance is ₹3,00,000.
- Balance at end of 2022-23 (4th year) was ₹1,50,000.
- You can withdraw 50% of ₹1,50,000 = ₹75,000 in 2026.
Extension After 15 years
- Maturity: After 15 years.
- Options:
- Without deposits: Just keep the money, it still earns interest.
- With deposits: Extend in 5-year blocks and continue investing.
- Withdrawals: Allowed once every year during extension.
👉 Example: You opened a PPF in April 2005.
- It matured in March 2020.
- You extend it for 5 years (till 2025).
- You can withdraw some money every year, while still earning interest.
Common Mistakes & Penalties (Avoid these)
- Multiple Accounts: PAN tracks nationwide – 50k fine possible.
- Miss Min Deposit: Account “discontinued” – 50/year penalty.
- Wrong Rate: Always use current 7.1% in Lumpsum calculator.
PPF Example (₹1.5 lakh per year for 15 years at 7.1%)
| Year | Amount Invested (₹) | Cumulative Investment (₹) | Approx. Balance at Year End (₹) | Tax Saved (₹) |
|---|---|---|---|---|
| 1 | 1,50,000 | 1,50,000 | 1,60,650 | 45,000 |
| 2 | 1,50,000 | 3,00,000 | 3,32,000 | 45,000 |
| 3 | 1,50,000 | 4,50,000 | 5,15,000 | 45,000 |
| 4 | 1,50,000 | 6,00,000 | 7,10,000 | 45,000 |
| 5 | 1,50,000 | 7,50,000 | 9,20,000 | 45,000 |
| 6 | 1,50,000 | 9,00,000 | 11,45,000 | 45,000 |
| 7 | 1,50,000 | 10,50,000 | 13,85,000 | 45,000 |
| 8 | 1,50,000 | 12,00,000 | 16,40,000 | 45,000 |
| 9 | 1,50,000 | 13,50,000 | 19,15,000 | 45,000 |
| 10 | 1,50,000 | 15,00,000 | 22,10,000 | 45,000 |
| 11 | 1,50,000 | 16,50,000 | 25,25,000 | 45,000 |
| 12 | 1,50,000 | 18,00,000 | 28,65,000 | 45,000 |
| 13 | 1,50,000 | 19,50,000 | 32,30,000 | 45,000 |
| 14 | 1,50,000 | 21,00,000 | 36,25,000 | 45,000 |
| 15 | 1,50,000 | 22,50,000 | 40,68,000 | 45,000 |
Final Totals
- Total Investment: ₹22,50,000
- Maturity Value (after 15 years): ₹40,68,000
- Interest Earned: ₹18,18,000 (tax-free)
- Tax Saved (30% bracket): ₹6,75,000
Who saves ₹45,000 per year?
Only people earning more than ₹12 lakh (and opting for the old tax regime) will save the full ₹45,000 per year.
| Tax Slab | Annual Tax Saved (₹) | Total Tax Saved in 15 yrs (₹) | Total Investment (₹) | Maturity Value (₹) | Interest Earned (₹) |
|---|---|---|---|---|---|
| 0% (Income ≤ ₹5 lakh) | 0 | 0 | 22,50,000 | 40,68,000 | 18,18,000 |
| 20% (Income ₹5–10 lakh) | 30,000 | 4,50,000 | 22,50,000 | 40,68,000 | 18,18,000 |
| 30% (Income > ₹12 lakh) | 45,000 | 6,75,000 | 22,50,000 | 40,68,000 | 18,18,000 |
This is all about PPF investment scheme in India.
This is a clear and useful explanation of the PPF scheme, covering benefits, eligibility, documents, and deposit rules in a very easy-to-understand way
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