Benefits of Public Provident Fund: The Public Provident Fund (PPF) is one of the most popular investment schemes in India. It is an excellent option for those who want to avoid investment risks and prefer to invest money for a long period. Additionally, this scheme offers tax benefits on both the investment and the returns. Even individuals without a job can choose PPF for long-term investment. Let’s explore the 5 major benefits of investing in this scheme.

No Risk, Guaranteed Returns

The Public Provident Fund (PPF) has a sovereign guarantee from the government. This means that every penny you invest is completely safe, with no risk of losing money. In comparison, bank deposits are insured only up to ₹5 lakh under the DICGC Act (Deposit Insurance and Credit Guarantee Corporation). However, in PPF, both your investment and returns come with a government guarantee.

Tax Benefits

PPF offers tax exemptions under Section 80C of the Income Tax Act and has Exempt-Exempt-Exempt (EEE) tax status.

  • You can claim a tax deduction of up to ₹1.5 lakh on your investment.
  • The interest earned and maturity amount (after 15 years) are also completely tax-free, making it one of the best tax-saving schemes.

High Returns with Small Investments

  • You can start a PPF account with just ₹100.
  • The minimum investment per year is ₹500, and the maximum limit is ₹1.5 lakh.
  • You can invest either in one lump sum or up to 12 instalments per year.

The interest rate on PPF usually ranges between 7-8%, and it is compounded annually. Currently, for Q4 FY25, the interest rate is 7.1%, which is higher than many fixed deposits (FDs).

Option to Extend PPF Tenure

After 15 years, when your PPF account matures, you have two choices:

  1. Withdraw the full amount.
  2. Extend it for 5 more years.

If you extend, you can choose whether to continue investing or keep the account without further deposits while still earning interest.

Loan Facility on PPF

PPF also allows you to take a loan against your balance.

  • You can apply for a loan between the 3rd and 6th year after opening the account.
  • The interest rate on the loan is lower compared to personal loans from banks.
  • No collateral is required to get a loan against your PPF balance.

This feature makes PPF a safe and flexible investment for long-term financial security.