The Public Provident Fund Scheme (PPF Account) is a popular government scheme introduced by the ministry of finance, which offers attractive return (which is completely exempted from tax) along with reasonable safety.
An investor can start with a minimum investment of Rs 500 to a maximum of Rs 1,50,000 in a financial year and can avail of other facilities like withdrawal, loan, and extension of account.
The scheme aims to –
- Mobilize savings by offering investments with decent returns and tax benefits; and
- Encourage the habits of financial planning in the masses by motivating them to build a retirement corpus.
Eligibility for opening PPF Account
- An individual, being an Indian resident and above 18 years can open only one account in his/her name. However, there is no upper age for opening the account.
- A minor can also open a PPF Account but the maximum limit of Rs 1,50,000 per year applies collectively to minor and his guardian.
- HUF, NRI and Foreigners cannot open the account.

Key Features of PPF Scheme
Some of the key features of PPF schemes are as follows-
1. Tax-Free Rate of Interest:
The interest rate is set by the Ministry of Finance on a yearly basis. The current rate is 8%. Additionally, the entire interest amount is exempt from tax.
2. Long-term investment:
One has to be invested for a time period of 15 years and it helps individual to accumulate a lump sum amount for the retirement.
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4. Low investment and opening balance:
You have to deposit a minimum of ₹500 yearly to maintain your account. This encourages especially the poor masses to develop a habit of savings. Investments can be made in a lump-sum or on a monthly basis as well.
Moreover, the account under the scheme requires a minimum balance of only ₹100 to be opened.
5. Withdrawal facility:
Partial withdrawal option can be availed only from 7th year onwards.
These withdrawals can be done only once a year. Also, the PPF account can only be closed after 15 years, when it matures.
6. Availability of loan:
The facility of loan can be availed between the 3rd and 5th financial year of opening the account.
This amount can be a maximum of 25% of the amount at the end of the 2nd year immediately before the year of the loan application.
Also, you can take a second loan before the end of the 6th year, but only if the previous loan has been paid off.
7. Extension of Account:
One can extend his/her account in a block period of 5 years after maturity.
Benefits of investing in PPF Scheme
- Tax-free return: Investment in Public Provident fund (PPF) is completely exempted from tax.
- Attractive long-term investment: It helps in fulfilling long-term goals with a deposit period of 15 years and lock in period of 7 years.Moreover, it offers effective return as compared to bank FDs and the interest rate is also compounded annually.
- Easy accessibility:The account can be opened at post offices, public banks or selected private banks. Moreover, you can open the account online as well.
- Lower risk: There is a very low risk of default since it is government backed.
- Suitable for retirement planning: It is suitable for building a retirement corpus due to features like long-term tenure, tax-free return, compounding benefit and a better interest rate vis-a-vis bank FD.
- No attachment: PPF funds can’t be attached under court order or laid claim to by creditors.
How to open a PPF Account?
As mentioned before, we can open this account offline (via a post office, a nationalized bank or some private banks) or online.
The following KYC documents are required to open a PPF account –
- Identity proof
- Residence proof
- PAN and Aadhar card
- 2 passport-size photographs
- Pay-in slip (available at any post office or banks)
- Nomination form
Forms for PPF Account
There are various forms from A to H pertaining to PPF account, which are issued for some specific purpose.

How to calculate PPF interest?
A PPF calculator is a free tool offered online and it’s a great tool for those investing in Public Provident Fund scheme.
It is often seen on the website of bank, post-office or third party service providers.
How to renew the PPF account?
The account holder has an option to extend the tenure beyond 15 years and it can be extended to a 5-year block with or without further investment.
- Without fresh investment: The account holder will continue to earn interest on the accrued sum after the maturity. Moreover, the individual is free to withdraw the sum freely once, every financial year.
- With fresh investment: The additional investment made will be added to the overall fund and the interest calculation will be made on the total funds. But the individual is restricted to withdraw a maximum of 60% of the funds held at the start of each 5-year period of extension.
How to withdraw PPF amount?
An individual cannot close the PPF account before maturity i.e. 15 years.
You cannot withdraw the funds before maturity even though the account becomes inactive.
The account can be closed and the entire sum can be withdrawn along with the interest accrued on completion of 15 years.
There is an option of partial withdrawal of funds from the 7th year but however, the amount to be withdrawn is lower of –
a.50% of the overall balance at the end of the fourth year, counting from the year of withdrawal or
b.50% of the total balance at the end of the year, before the year of withdrawal. However, withdrawals are to be made only once in a financial year.
FAQs on PPF Accounts
How to apply for this scheme through SBI?
You can apply for PPF by filling up Form A and then submit it to thebranch of any bank that offers this facility, with the documents mentioned above. You need to mention the name of the branch where you wish to open PPF account in Form A.
Can somebody maintain more than 1 PPF account under his/her name?
No, an individual can maintain only one PPF Account except in cases where the account is opened on behalf of a minor.
What are the minimum and maximum amounts that can be maintained under this scheme?
The minimum amount to be maintained is Rs. 500 per annum and the maximum amount is Rs. 1.50,000 per annum.
Is there is any penalty when someone fails to deposit any amount in one or more financial years?
Yes, there is. A penalty of Rs. 50 is levied per year.
Can somebody extend the tenure of PPF beyond the maturity period?
By submitting form H, one can extend the tenure for 5 years beyond the maturity.
Can I transfer PPF Account?
An individual has the option to transfer his/her PPF account from post office to any bank account and vice versa.
Is PPF account exempted from wealth tax?
Yes, it is exempted from wealth tax.
Investment in Public Provident Fund is a great way of investment for long-term and also motivates individual to create a retirement corpus.
Similarly, there is another tax savings fund called Equity Linked Savings Scheme (ELSS), which is also exempted like PPF.
It can generate higher returns as compared to Public Provident Fund but it’s a risky affair due to equity feature attached to it.
Before taking any decision, please make sure to go through all the terms and conditions related to each investment.
Doing so can help you make an informed decision and build a retirement corpus with ease.
Dont you think that the PPF is not remaining to be a wise investment any more ? They plan to check the rate every quarter which would most probably yield in reduction of rates across long term(already 8.1%). Its becoming less and less attractive each passing day.
Nice article !!!
Hi,
Thank you for your feedback.
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