Question 1

What is PPF and what is the current interest rate?

Accepted Answer

PPF (Public Provident Fund) is a government-backed savings scheme with a 15-year lock-in period. The current interest rate is 7.1% per annum (FY 2024-25), compounded annually. The rate is reviewed quarterly by the Government of India. PPF enjoys EEE (Exempt-Exempt-Exempt) tax status — deposits qualify for Section 80C deduction, interest is tax-free, and maturity is tax-free.

Question 2

What is the maximum and minimum PPF deposit?

Accepted Answer

The minimum annual deposit is ₹500 and the maximum is ₹1,50,000 per financial year. You can make deposits in lump sum or up to 12 instalments per year. Depositing before the 5th of each month ensures that month counts for interest calculation. Missing the minimum deposit incurs a ₹50 penalty plus ₹500 to reactivate the account.

Question 3

Can I extend my PPF account beyond 15 years?

Accepted Answer

Yes, PPF can be extended in blocks of 5 years after the initial 15-year maturity — with or without fresh deposits. Extension with deposits continues to earn interest on the growing balance, while extension without deposits earns interest only on the existing corpus. Extensions significantly boost the maturity value due to the compounding effect on a large base.

Question 4

How does PPF compare to mutual funds?

Accepted Answer

PPF offers guaranteed 7.1% tax-free returns with zero risk — ideal for the debt portion of your portfolio and conservative investors. Equity mutual funds have historically returned 12-15% CAGR but carry market risk and are partially taxable. A balanced strategy uses PPF for the ₹1.5L annual 80C limit and equity SIP for additional investments targeted at long-term wealth creation.

Question 5

Can I withdraw from PPF before maturity?

Accepted Answer

Partial withdrawals are allowed from the 7th financial year onwards, up to 50% of the balance at the end of the 4th preceding year or the preceding year (whichever is lower). Premature closure is allowed only after 5 years for specific reasons (serious illness, higher education) with a 1% interest rate penalty. Loans against PPF balance are available from the 3rd to 6th year.

Question 6

Is PPF better than FD for long-term savings?

Accepted Answer

For long-term savings (15+ years), PPF is generally better than FD because: (1) PPF interest (7.1%) is entirely tax-free under EEE status, while FD interest is taxed at your slab rate; (2) PPF deposits qualify for Section 80C deduction; (3) compounding over 15 years amplifies the tax advantage. For a person in the 30% tax bracket, a 7.1% PPF effectively yields more than a 10% pre-tax FD after accounting for taxes.

Question 7

Where can I open a PPF account?

Accepted Answer

PPF accounts can be opened at any post office, SBI, or designated nationalised banks (Bank of Baroda, Bank of India, Central Bank, etc.). Most banks also offer online PPF account opening through their net banking or mobile app. You can hold only one PPF account in your name. NRIs are not eligible to open new PPF accounts but can continue existing ones until maturity.

PPF Calculator — Public Provident Fund Returns