PPF (Public Provident Fund) is one of the safest long-term savings instruments in India. It is backed by the government, compounds at a declared rate (currently around 7.1%), and has EEE tax status — deposits, interest, and maturity are all tax-free. The catch: your money is locked for 15 years.
How PPF works
Open a PPF account at any bank or post office. Deposit between ₹500 and ₹1.5 lakh per financial year (the full ₹1.5L also counts toward Section 80C under the old tax regime). Interest compounds annually at the rate set by the government each quarter. The account matures after 15 years and can be extended in 5-year blocks.
PPF vs FD vs ELSS
- PPF: guaranteed ~7.1%, fully tax-free, 15-year lock-in. Best for long-term safe savings.
- FD: similar rate but interest taxed at your slab. Better for 1–5 year needs.
- ELSS: equity growth potential, 3-year lock-in, market risk. Best for 80C + growth under old regime.
The takeaway
PPF interest is completely tax-free — a 7.1% PPF beats a 7% FD by a wide margin for taxpayers in the 20–30% bracket after tax.
Can you withdraw early?
Partial withdrawals are allowed from year 7 (up to 50% of balance at end of year 4). Loans against PPF are available from year 3. Full withdrawal only at maturity (15 years) unless extended. This lock-in is a feature, not a bug — it forces long-term discipline.