How to invest in PPF (public provident fund)


Most of us in India, have in one way or the other, heard about public provident fund (PPF). At the onset, PPF is widely understood as a tax saving instrument.  In PPF, the government steps in to help people create savings for themselves. This scheme aims to ensure that adequate funds are available at an old age. In order to encourage people to save, the government provides incentives like tax deductions, a higher rate of interest and complete security of their investments. It is a very attractive scheme for those who invest regularly.

Some of the key points to be understood while investing in PPF are listed below:


Minimum Investment is Rs.500/- per year while the maximum upper limit is Rs.150,000/- per year. One of the important differences between PPF and other schemes like NSC, is that every year you are required to make a minimum investment of Rs.500/- only, as compared to a lump sum amount of Rs.10,000/- for NSC..

 Lock in period

There is a primary lock-in period of 15 years, to ensure that you receive money when you require it. The long lock-in period ensures that you have a sizeable amount of money on maturity. However, you can make partial withdrawals from the 7th year onwards.

Rate of interest

The current rate of interest is around 8.7%. Every year, the government revises this rate of interest.

Account holders

Everybody is encouraged to open an account. Accounts can be opened in the names of minors also. You can make upto a maximum of 12 deposits per year.

Loans against your PPF account

In case you need money, but don’t want to withdraw it, then you can take a loan any time in or after the 3rd year till the 6th year.

Tax benefit

Investment upto Rs.150,000/- is eligible for tax deduction under section 80 C. Also at the end of 15years, you will get the amount you deposited, plus all the interest earned is tax free.