Public Provident Fund (PPF): A Secure Tax-Saving Investment for Long-Term Growth

01 Feb 2024

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PPF: Ideal Tax-Saving Option for Low-Risk Investors

The Public Provident Fund (PPF) is a long-term savings and investment scheme introduced by the Government of India to encourage individuals to build a retirement corpus while enjoying various financial benefits established in 1968 under the Public Provident Fund Act.

Understand PPF in 5 easy steps

1. Interest rates

While the PPF rate is prescribed by the government, it is linked to the 10-Year GSEC as a marker.

2. Interest calculation

Interest on PPF is compounded annually but calculated monthly.

3. Liquidity

PPF investments are locked in for a period of 15 years. Partial withdrawal post completion of seven years is available to the extent of 50 % at the end of the fourth year from the date of account opening.

4. Investment limit

Minimum investment = Rs 500 maximum and the maximum investment = Rs 1.5 lakhs. Investments over Rs 1.5 lakhs do not fetch a return.

5. Tax benefit

PPF is among the rare investments that get a tax benefit at all three stages (EEEs) –Exemption on initial investment under section 80C of the Income Tax Act, Exemptions on the returns on investment made and Exemption on withdrawal of investment proceeds.

Benefits of PPF

  • Attractive tax saving option
  • Suitable for building retirement corpus
  • Avail of loan upto a maximum of 25% of the PPF balance.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision.

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    The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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