Benefits of PPF: The Public Provident Fund (PPF) is one of the most popular investment schemes in India. It is an excellent option for those who prefer low-risk investments and want to invest money for the long term. In this scheme, you also receive tax benefits on both the returns and the investment amount. Even people without a job can choose PPF for long-term investment. Let’s take a closer look at the five major benefits of investing in this scheme.

No Risk, Guaranteed Returns

The Public Provident Fund (PPF) is backed by a sovereign guarantee from the government, meaning every penny you invest is completely safe. Unlike a bank deposit, where the Deposit Insurance and Credit Guarantee Corporation (DICGC) only guarantees a maximum amount of Rs 5 lakh, PPF ensures the safety of your entire investment. Additionally, this scheme has a government guarantee on the returns as well.

Tax Benefits

PPF offers tax exemptions under Section 80C of the Income Tax Act. It has an Exempt-Exempt-Exempt (EEE) status, meaning you can claim a tax deduction for up to Rs 1.5 lakh invested in the scheme. Moreover, both the interest earned and the maturity amount after 15 years are completely tax-free. This makes PPF one of the best schemes in terms of tax advantages.

High Returns on Small Investments

You can start investing in PPF with just Rs 100. The minimum annual investment is Rs 500, and you can invest up to Rs 1.5 lakh. You can choose to make a lump sum payment or invest in up to 12 instalments throughout the year. The interest rate on PPF is consistently between 7-8%, currently at 7.1% for FY25 Q4, compounded annually. This is higher than most bank fixed deposits.

Option to Extend Tenure

After 15 years, your PPF account matures, but you have two options: withdraw the entire amount or extend the account for another five years. You can decide whether you want to continue contributing during the extended period, providing flexibility in managing your investment.

Loan Facility on PPF

A unique feature of PPF is that you can take a loan against your PPF account. This option is available between the third and sixth year of opening the account. The loan comes with favourable interest rates, making it an attractive option if you need a loan but prefer not to mortgage other assets.