PPF Account — 7.1% Tax-Free, 15-Year Savings Scheme

What is Public Provident Fund (PPF)?

Public Provident Fund (PPF) is a government-backed long-term savings scheme with guaranteed returns and complete tax exemption under the EEE (Exempt-Exempt-Exempt) category — meaning your deposits, interest earned, and maturity amount are all tax-free.

Key features:

• Interest rate: 7.1% per annum (compounded annually, set by government quarterly)
• 15-year lock-in period (extendable in 5-year blocks)
• Section 80C tax deduction on deposits up to ₹1.5 lakh/year
• Interest and maturity amount are fully tax-free
• Cannot be attached by courts for debt recovery (protected from creditors)

PPF at a Glance

How to Open PPF Account Online

Via SBI Net Banking

1. Log in to SBI Net Banking at onlinesbi.sbi
2. Go to "Savings & Deposits" → "PPF Account" → "Open PPF Account"
3. Choose self account or minor account
4. Enter nominee details
5. Select branch (home branch recommended)
6. Deposit minimum amount (₹500) via net banking
7. PPF account is created → note the PPF account number

Via HDFC / ICICI / Axis Net Banking

1. Log in to your bank's net banking portal
2. Look for "PPF Account" under Savings or Deposits section
3. Fill in the form and submit
4. Account opens instantly

Via Post Office (Physical)

1. Visit any Post Office with the PPF application form (Form 1)
2. Submit with: Aadhaar copy, PAN, photographs
3. Deposit minimum ₹500
4. Passbook issued — account is ready

PPF can be opened at any authorised bank or post office. You can only have one PPF account — you cannot open multiple accounts.

PPF for Minors

Parents/guardians can open a PPF account on behalf of a minor child. Key rules:

• The ₹1.5L/year limit is combined for parent + minor child PPF accounts
• Minor's PPF matures when the minor turns 18 + 15 years from opening

PPF Deposit Schedule

• Best time to deposit: Between 1–5 April each year
• Interest is calculated on the minimum balance between 5th and last day of each month
• Depositing before the 5th of each month ensures that month's deposit earns interest for that month
• Depositing after the 5th means you lose one month's interest

Tip: Set up a recurring bank transfer on April 1–3 each year for maximum interest earnings over 15 years.

Partial Withdrawal Rules

Loan Against PPF

• Available from 3rd to 6th year only
• Loan amount: up to 25% of balance at end of 2nd preceding year
• Interest on loan: PPF rate + 2%
• Loan must be repaid within 3 years

Extension After 15 Years

After the 15-year maturity:

1. Close and withdraw — get full corpus tax-free
2. Extend without deposits — account continues earning interest (can withdraw partially once per year)
3. Extend with deposits — in blocks of 5 years, continue depositing ₹500–₹1.5L per year with full 80C benefit

PPF Growth Calculator Example

Starting deposit of ₹1.5 lakh/year for 15 years at 7.1%:

• Total deposit: ₹22.5 lakh
• Estimated maturity value: ~₹40–41 lakh
• Tax-free interest earned: ~₹18 lakh

Frequently Asked Questions

Can NRIs open or continue a PPF account?

NRIs who opened PPF before becoming NRI can continue until maturity but cannot extend after maturity. NRIs cannot open a new PPF account.

PPF vs FD — which is better?

PPF gives higher effective returns because interest is tax-free. A 7.1% PPF is equivalent to a 10%+ FD for someone in the 30% tax bracket.

Can I have PPF and ELSS (mutual fund) both under 80C?

Yes — 80C limit is ₹1.5L combined. You can split between PPF and ELSS as you choose. PPF is risk-free; ELSS has market risk but potentially higher returns.

What if I miss the minimum ₹500 deposit in a year?

The account becomes dormant. You can reactivate by paying ₹500 per missed year + ₹50 penalty per year. Visit the bank/post office to reactivate.

Can the government reduce PPF interest rate below 7.1%?

The interest rate is reviewed quarterly by the government. It has ranged from 7.1% to 12% historically. It can go up or down but is unlikely to drop below 7% given the long history.

Official Links

• NSI India (Post Office PPF): nsiindia.gov.in
• Open via SBI: onlinesbi.sbi
• Open via HDFC: hdfcbank.com
• Open via ICICI: icicibank.com
• Helpline: Visit your nearest bank branch or post office