PPF (Public Provident Fund) – Eligibility, Tax Benefits, Interest Rate 2025

A PPF account is one of the most commonly used long-term investing choices for people who don't want to take on a lot of risk. The government supports it, it helps you save taxes, and it provides good profits. The current PPF interest rate for Q4 FY 2024–2025 is 7.1%, and the minimum investment required to create this account is Rs. 500. A PPF account should be opened by anyone searching for a secure investment solution that will save taxes and provide promised profits.

What is a PPF Account?

Long-term investors might choose the Public Provident Fund (PPF) plan, which offers a high interest rate and returns on investment. The refunds and interest earned are not covered by income tax. A PPF account must be opened under this scheme, and any deposits made within a year are eligible for section 80C deductions.

PPF Basic Key Highlights

Like all other small savings plans, such as the National Savings Certificate (NSC), Sukanya Samriddhi Yojana, and Senior Citizens Savings Scheme (SCSS), PPF, or Public Provident Fund was introduced by the government with the goal of promoting small savings and offering returns on them. A minimum investment of Rs. 500 can be made by anyone choosing to invest in PPF. The annual maximum that can be invested, however, is Rs. 1,50,000. Here is the given table which highlights everything you need to know about PPF for 2024-25:

Characteristics of PPF account

Lock-in period: PPF is a long-term investment that has a 15-year lock-in period. This indicates that a PPF account's balance can only be withdrawn at maturity, which happens 15 years after the account was opened. After the lock-in period is over, this tenure can be extended by 5 more years.

Loan against Investment: A positive aspect of public provident funds is the ability to borrow loans over the amount invested. The loan will only be approved if it is taken out at any point between the start of the third year and the end of the sixth year from the account's activation date.

Minimum and maximum Investment: Every year, a person must invest a minimum of Rs. 500. The maximum amount that can be invested in a PPF account in a single financial year is Rs. 1.5 lakh.

Taxation: PPF also provides the best tax benefits. This is categorized as in the Exempt-Exempt-Exempt (EEE) category of the tax policy. It also means that, under Section 80C, an individual's taxable income for a certain financial year is excluded from the amount invested in PPF. There is no tax liability on the interest earned on PPF deposits or the total amount collected.

Interest on a PPF Account: The Central Government of India sets the interest rates for public provident fund plans.It claims to offer higher rates of interest than regular accounts kept by the commercial banks.The interest rates that are now paid on these accounts are 7.1%, and the government may decide to adjust them every three months.

Who Is Eligible For PPF Account?

• Any Indian citizen living in the country is eligible to register a PPF account in their own name.
• A public provident fund account in a minor's name is also allowed, as long as their parents manage it.
• PPF accounts cannot be opened by NRIs. But an Indian resident who opened an account and later became an NRI is permitted to keep it open until it matures.
• Multiple account opening and joint account opening are not allowed.

Documents Required for PPF Account

The following set of documents needs to be completed when starting a PPF account:

• PPF account opening form (this form is also available from any bank that has the authority to allow the opening of a PPF account).
• KYC documents, such as a driver's license, voter ID card, or Aadhaar card, are used to confirm a person's identification.
• Address Proof
• PAN Card
• A passport-sized photo of the person
• Nomination form- Form E this form is also available from any bank that has the authority to allow the opening of a PPF account.

How to Open a PPF Account?

You can open a PPF account with the Post Office or any nationalized bank, such as Punjab National Bank or the State Bank of India. Even some private banks, including ICICI, HDFC, and Axis Bank, are now permitted to offer this service. Opening a Public Provident Fund (PPF) account is a straightforward process. You can do it online through your bank’s net banking or by visiting a bank/post office in person. Here’s a step-by-step guide:

Open a PPF account online Procedure:

1. Go to the net banking portal of your bank and log in.
2. Find the option to open a PPF account, which is normally found under "Investments" or "Government Schemes."

3️. Complete the necessary details and submit them for KYC documents.

4️. Make the first payment (at least ₹500).

5️. For reference, get the PPF account details.

Note: Some banks may require you to visit a branch to submit documents.

Open a PPF account Offline Procedure (via Bank or Post Office):

1. Go to the post office or bank branch which is nearest to you.

2️. Collect and complete the PPF application.

3. Attach copies of the KYC documents that have been self-attested.
4. Submit all the documents with a cash, check, or demand draft for the initial deposit.

5️. Once processed, you will receive a PPF account passbook.

PPF Tax Benefits

Exemptions from income taxes apply to the principal amount deposited into a PPF account. Under section 80C of the Income Tax Act of 1961, the full value of the investment may be eligible for a tax waiver. You can only invest a maximum of Rs. 1.5 Lakh in total in a single fiscal year.

The entire amount of interest gained on a PPF investment is generally not included in tax calculations. Taxes are not applied to the whole amount withdrawn from a PPF account at maturity. The public provident fund system is acceptable to many Indian investors because of this policy.

Conclusion

If you want a quick and easy way to open a PPF account, the online method is the best choice. It saves time and allows you to transfer money easily. But if you need help or prefer face-to-face interaction, visiting a bank or post office is a good option.

PPF is a safe and reliable way to save money for the future. Since it has a 15-year lock-in period, it helps you develop a habit of saving regularly. It is great for retirement, your child’s education, or long-term financial goals.

One of the biggest advantages of a PPF account is that your investment, interest earned, and maturity amount are all tax-free. This makes it one of the best risk-free investment options in India. No matter if you are salaried, self-employed, or a homemaker, a PPF account can help you build a secure financial future. Start saving today and enjoy guaranteed returns and tax benefits.

FAQ

1. Is the PPF investment tax-free?

Yes, you can claim a tax deduction of up to ₹1.5 lakh per year under Section 80C of the Income Tax Act.

2. Is the interest earned on PPF taxable?

No, the interest earned on your PPF balance is completely tax-free.

3. Do I need to pay tax when my PPF account matures?

No, the entire maturity amount (principal + interest) is tax-free.

4. Can I withdraw money from PPF before maturity?

Yes, but only after 5 years (except in cases of death). The amount withdrawn is tax-free.

5. Does TDS apply to PPF interest?

No, banks do not deduct TDS (Tax Deducted at Source) on PPF interest.

6. Can I extend my PPF account after 15 years?

Yes, you can extend it in blocks of 5 years with or without further deposits, and the tax benefits continue.