PPF (Public Provident Fund) — Complete Guide 2026
Government-guaranteed, tax-free investment with EEE status. One of the safest long-term savings options in India with a 15-year lock-in period.
Key Features of PPF
- EEE (Exempt-Exempt-Exempt) tax status — investment, interest, and maturity all tax-free
- Government of India guaranteed — zero credit risk
- Current interest rate of 7.1% per annum, compounded yearly
- Minimum deposit of ₹500 per year, maximum ₹1.5 lakh per year
- 15-year lock-in period with option to extend in blocks of 5 years
- Partial withdrawal allowed from 7th financial year onwards (up to 50% of balance at end of 4th year)
- Loan facility available from 3rd to 6th financial year (up to 25% of balance at end of 2nd preceding year)
- Can be opened at any post office or designated bank branch
- Nomination facility available
- Cannot be attached by court decree — fully protected from legal claims
Advantages
- +Completely tax-free — EEE status means no tax on investment, interest, or maturity
- +Government guaranteed — zero default risk, safest investment in India
- +7.1% interest is higher than most bank savings accounts and comparable to FD rates (but tax-free)
- +Compounding effect over 15 years creates significant wealth
- +Section 80C deduction up to ₹1.5 lakh reduces your tax liability
- +Partial withdrawal and loan facility provide some liquidity
- +Can be extended in 5-year blocks after maturity with or without contribution
- +Protected from court attachments — your money is legally safe
Limitations
- -15-year lock-in is very long — not suitable for short-term goals
- -Maximum investment capped at ₹1.5 lakh per year — limits wealth creation for high earners
- -Interest rate is reviewed quarterly by the government — not fixed for the entire tenure
- -Only one PPF account per person (joint accounts not allowed)
- -NRIs cannot open new PPF accounts (existing accounts can continue till maturity)
- -No premature closure allowed before 5 years (and only under specific conditions after 5 years)
- -Returns are lower than equity mutual funds over the long term
PPF vs Fixed Deposit — Key Differences
| Feature | PPF | Bank FD |
|---|---|---|
| Interest Rate | 7.1% | 6.0% - 8.0% |
| Tax on Interest | Tax-free | Taxable |
| Tax on Maturity | Tax-free | Taxable |
| Section 80C Benefit | Yes (up to ₹1.5L) | Only Tax Saver FD |
| Lock-in Period | 15 years | 7 days - 10 years |
| Guarantee | Government of India | DICGC up to ₹5L |
| Max Investment | ₹1.5 lakh/year | No limit |
| Liquidity | Low (7th year onwards) | High (premature withdrawal) |
This comparison is for informational purposes. Effective post-tax returns from PPF at 7.1% are often higher than an FD at 7.5% for those in the 30% tax bracket, because PPF interest is completely tax-free.
Eligibility
- Indian resident individuals (NRIs cannot open new accounts)
- Can be opened for minor children (one account per child, managed by guardian)
- Only one PPF account per person allowed
- HUFs (Hindu Undivided Families) are not eligible (since 2005)
- No upper age limit — can be opened at any age
- Minimum annual deposit of ₹500 required to keep account active
Where to Open a PPF Account
You will be redirected to the official website.
PPF Calculator Example
If you invest ₹1.5 lakh every year for 15 years at 7.1%:
* Approximate calculation. Actual amount depends on timing of deposits and prevailing rates.
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Disclaimer: Information based on Ministry of Finance notifications. PPF interest rate of 7.1% is as announced by the Government of India for FY 2025-26. Rates are subject to quarterly revision. Tax benefits are subject to changes in tax laws. PPF accounts can be opened at any post office or designated bank branch. Please verify all details with your bank or post office before investing. RupeeLens is a financial comparison platform. We do not provide financial advice.
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Important: Mutual fund investments are subject to market risks. Past performance does not guarantee future results. Please read all scheme-related documents carefully before investing.
RupeeLens is a financial comparison platform and does not provide investment advice as defined under SEBI (Investment Advisers) Regulations, 2013. The information displayed is for comparison purposes only. Full disclaimer