PPF Your Investment portfolio can’t be complete without Public Provident Fund


PPF refers to Public Provident Fund and is a Long Term investment Scheme of the Govt. of India on which regular interest is paid. Any Individual (whether Salaried or Self-Employed or any other category) can invest in this scheme and can earn a handsome tax-free return on the same which is usually higher than the return offered by Banks on Fixed Deposits.

Extract of Section 80C of Income tax act, 1961:

This section has been introduced by the Finance Act 2005. The total deduction under this section (along with section 80CCC and 80CCD) is limited to Rs. 1 .50 lakh only for the following:

  1. As a term fixed deposit (Fixed Deposit) for 5 years or more with Scheduled bank in accordance with a scheme framed and notified by the Central Government.
  2. In an Account under Senior Citizen  Savings Scheme Rules,2004
  3. As contribution to employee to an approved Super Annuation Fund.
  4.  As contribution to Public Provident Fund Scheme, 1968, in the name of self, spouse and any child in case of Individual.
  5. Continued……

Analysis of the above provision related to Public Provident Fund

  1. What is PPF?

Public Provident Fund (PPF) scheme is a long term investment option backed by Government of India which offers safety with attractive interest rate and returns that are fully exempted from Tax .Investors can invest minimum Rs. 500 to maximum Rs. 1,50,000 in one financial year and can get the facilities such as loan, withdrawal and extension of account.

  1. I am working for a software company and I am covered under Employee Provident Fund (EPF)Scheme. Can I still invest in PPF?

Yes, PPF is an investment scheme offered to the General Public. Any citizen of India can invest in PPF regardless of the fact that he is covered under the Employee Provident Fund

  1. Who can open PPF account?

Any Individual (whether Salaried or Self-Employed or any other category) can invest in this scheme. This scheme is open to the whole General public.

  1. Can an NRI open a PPF account?

No, NRI’s are not allowed to open the PPF account. Nevertheless, if an individual opens a PPF account while he is a resident of India and later he becomes NRI, he will still be allowed to continue the PPF account.

  1. Where should I open PPF account?

PPF account can be opened in a post office or in selected banks such as State Bank of India or ICICI, etc.

  1. Can I withdraw the investment anytime I feel like?

No. Its only after 6 years from the opening date of PPF account one may start the withdrawal subject to the condition that maximum withdrawal subject to the condition that maximum withdrawal allowed is 50% of the amount present in his account at the end of the 4 years or the end of the year prior to in which withdraw is to be made, whichever is lower.

However after a period of 15 years, entire amount in the PPF account is withdrawn which shall be tax- free

  1. Can I take loan account PPF account?


Loan facility is available from 3rd financial year upto 6th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011.

  1. Can I open PPF account in my daughter’s name?


Any individual may, on his own behalf or on behalf of a minor, of whom he is the guardian, subscribe to the Fund in such manner and subject to such maximum and minimum limits as may be specified in the Scheme.

  1. What the current rate of interest on PPF account?

Current rate of interest on PPF account is 8.7% per annum

 10. What are the major tax benefits of PPF?

There are multiple tax benefits from PPF.

During the time of investment, Annual contributions qualify for tax rebate under Section 80C of income tax. Contributions to PPF accounts of the spouse and children are also eligible for tax deduction.

Interest earned from the PPF account is fully exempt.

At the time of withdrawal too, amount withdrawn shall be fully tax exempt

11. Why should one invest in PPF account?

Amidst Uncertain market conditions and interest rate environment, normal Investors seek a reasonable fixed return on the investments which will able to beat the Infaltion.PPF is an investment vehicle which has been best suited for such type of Investors, which gives you a relatively higher interest rate of 8.70% per annum. What makes it more attractive is that it offers multiple tax benefits compared to other investment portfolios.


PPF is one of the most secure investments in recent times. It not only offers protection against risk of Inflation and other risks, but also offers multiple tax benefits. Thus Your Investment portfolio can’t be complete without Public Provident Fund.

Your valuable suggestions and queries are always welcome. If you have any queries kindly mail us at [email protected] written by Shri Hari Bhat

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