Public Provident Fund (PPF) is a popular long-term investment choice in India, designed to provide excellent returns while ensuring safety and tax benefits. Launched in 1968, the PPF scheme encourages small savings and offers attractive interest rates to investors looking for stable growth. This article will provide you with comprehensive details about the PPF, including its features, interest rates for 2025, tax benefits, eligibility criteria, required documents for opening an account, and more.
What is Public Provident Fund?
The Public Provident Fund (PPF) is a trusted savings scheme that amalgamates tax benefits, safety, and competitive returns, making it a preferred investment for many. The interest earned on the PPF is tax-free under the Income Tax Act, allowing investors to claim deductions on contributions up to ₹1.5 lakh under Section 80C.
Check Your PPF Account Balance
PPF Features at a Glance
| Name | Public Provident Fund |
| Interest Rate | 7.1% per annum (2025) |
| Tenure | 15 years |
| Minimum Contribution | ₹500 |
| Maximum Contribution | ₹1.5 lakh annually |
| Tax Benefits | Deductible up to ₹1.5 lakh under Section 80C |
| Risk Profile | Guaranteed, risk-free returns |
Features of the PPF Scheme
Here are some of the main features that make the PPF scheme appealing:
- Lock-in Period: The PPF has a mandatory lock-in period of 15 years, which encourages long-term savings. After 15 years, you can extend the tenure in blocks of 5 years. Early withdrawals are possible only under specific circumstances.
- Interest Rate: The PPF interest rate is determined by the government and revised quarterly. For the first quarter of 2025, the interest rate remains at 7.1%. Interest is calculated monthly, based on the lowest balance in the account and credited at the end of the financial year.
- Contribution Requirements: Investors must make a minimum deposit of ₹500 annually, with a maximum limit of ₹1.5 lakh in one financial year.
- Tax Exemptions: The PPF falls under the Exempt-Exempt-Exempt (EEE) category, meaning investments, interest earned, and withdrawals at maturity are all tax-free.
- Loans Against PPF: Account holders can avail loans against their PPF balance after the completion of one year and before five years of account opening. The maximum loan amount is 25% of the balance at the end of the second year.
Read about Mahila Samman Bachat Patra
Importance of the Public Provident Fund
For risk-averse investors, the PPF is an excellent choice as it is government-backed and offers guaranteed returns. With no exposure to market fluctuations, PPF accounts are a safe harbinger of steady income, especially in times of economic uncertainty. This helps investors achieve financial goals more effectively.
Eligibility for Opening a PPF Account
To qualify for a PPF account, an individual must meet the following criteria:
- Must be a resident Indian; NRIs cannot open a new PPF account.
- Parents or guardians can open accounts for their children.
- Opening multiple PPF accounts or joint accounts is prohibited.
Documents Needed for PPF Account Opening
The following documents are essential to open a PPF account:
- A recent passport-size photo
- Completed PPF application form
- Permanent Account Number (PAN) card
- KYC documents for identity verification (e.g., Aadhaar, Voter ID, Driving License)
- Proof of address
- Nomination Form- Form E
Explore Post Office Saving Scheme
Banks Accepting PPF Accounts
| ICICI Bank | Bank of Baroda |
| State Bank of India | IDBI Bank |
| Indian Overseas Bank | Axis Bank |
| HDFC Bank | Corporation Bank |
| Allahabad Bank | Central Bank of India |
| Canara Bank | Union Bank of India |
| Bank of Maharashtra | Punjab National Bank |
| Oriental Bank of Commerce | Bank of India |
| Indian Bank | United Bank of India |
| Dena Bank | Vijaya Bank |
How to Open a Public Provident Fund Account
To open a PPF account, follow these steps:
- Log into the net banking portal of your bank.
- Select the option to open a PPF account.
- Choose between ‘Self Account’ or ‘Minor Account.’
- Fill in personal details including nominee and bank details.
- Verify information like your PAN.
- Deposit the desired amount into your new PPF account.
- Set up automatic transactions for consistent contributions.
- After receiving an OTP, finalize the application. Note down your account number for future reference.
- Some banks might require you to submit hard copies of your application along with KYC documents.
How to Check Your PPF Account Balance Online
To access your PPF balance online, if your account was opened using net banking:
- Log into your net banking account.
- Your PPF balance will appear on the dashboard.
- Retrieve account statements, apply for loans, and manage standing instructions through the net banking portal.
Understanding Tax Implications on PPF
The PPF falls under the EEE category. This ensures that your contributions, interest earned, and withdrawals are all exempt from tax, up to the annual limit of ₹1.5 lakh.
Loans Against PPF
Loans can be taken against your PPF investment starting from the third year after opening the account. Here are key points about PPF loans:
- Loans can be borrowed between the third and sixth years of the account.
- The maximum loan period is 36 months.
- You can take a loan of up to 25% of the PPF balance from two years prior to your application.
- If the first loan is repaid in full, a second loan can be applied for before the six-year mark.
Interest Rate on Loans against PPF
Loans will attract an interest rate of 1% above the applicable PPF interest rate if repaid within 36 months; if paid earlier, a 6% above the PPF rate will apply. Note that interest is to be paid separately within two months after clearing the principal.