Earn Guaranteed Returns: Know what is PPF Account

What is PPF Account

If you are a working professional, you may have already come across terms like PPF, EPF, etc. And if you have been wondering what is PPF account, we are here to help you out!

What is a PPF account?

The Public Provident Fund (PPF), which is supported by the Government of India, is a well-known savings and tax-efficient channel.

The National Savings Institute started the programme in 1968. The PPF programme was established to encourage small investments by providing competitive returns. The programme comes with numerous tax advantages and is backed by a Central Government guarantee.

What is PPF Account’s Notable Features?

Once you have a clear understanding of what is PPF account, the next step would be to make yourself aware of the PPF account’s salient features.

Lock-in Period

Public Provident Fund has a 15-year lock-in period and is a long-term investment. This indicates that the money amassed in a PPF account can only be released at maturity, which is 15 years after the account is opened.

At the conclusion of the real lock-in period, this tenure may be extended by five years. Withdrawals can be made early, but only in extreme circumstances.

Minimum and Maximum Investment

Individuals must make an annual minimum investment of ₹500. A Public Provident Fund account may only receive a maximum investment of ₹1.5 lakh in a single fiscal year.


Since Public Provident Fund is classified as Exempt-Exempt-Exempt (EEE) under the tax code, it also gives the best tax advantages.

This firstly means that a person’s PPF investments are exempt from taxation for the relevant financial year (under Section 80C).

Additionally, there is no tax obligation on the accumulated amount or the interest earned on PPF deposits.

Loan Against PPF

A PPF account holder may borrow money against the balance of his Public Provident Fund account. However, the loan can only be accepted between the start of the third fiscal year and the conclusion of the sixth fiscal year following the date the account was opened.

A maximum loan of 25% of the PPF balance at the end of the second year, or the year before the year for which the loan is being used, is permitted.

Public Provident Fund - PPF Account

What is PPF Account Interest Rate?

Every quarter, the government sets and pays the Public Provident Fund interest rate. The PPF interest rate has been set at 7.1 percent for the second quarter of the fiscal year 2022–23, or from July 1 to September 30, 2022.

The interest is computed each month on the lowest Public Provident Fund account balance in the account from the fifth to the final day of the month, and at the end of each fiscal year, the amount is credited to the PPF account.

Investors in Public Provident Fund are therefore encouraged to make PPF account contributions before the fifth of every month.

What is PPF Account Eligibility Criteria?

  • A Public Provident Fund account can only be opened by an Indian resident.
  • PPF accounts cannot be opened by NRIs. However, a resident Indian who opened an account but later became an NRI can keep the account open till maturity.
  • For their underage children, parents and guardians can also open Public Provident Fund accounts.
  • Multiple accounts and joint account opening are prohibited.

What is PPF Account Opening Process?

You can open a Public Provident Fund account through the net banking service of any of the aforementioned institutions if you have an account with them:

  1. Access your online banking account.
  2. To open a PPF account, select the “Open a PPF Account” option.
  3. Select the appropriate option between a “self-account” and a “minor account”.
  4. Enter the necessary details, including nominee information and bank information, etc.
  5. Verify the information displayed on the screen, such as your Permanent Account Number (PAN), etc.
  6. Enter the amount you intend to put into your Public Provident Fund account after you have verified the facts.
  7. You will be required to set up standing instructions that will allow the bank to deduct the payment either in a lump sum or at predetermined intervals.
  8. After you make your choice, you will receive an OTP on your registered mobile number
  9. Upon completion of the verification process, your Public Provident Fund account will be opened. It is advisable that you write down the account number shown on the screen for future use.
  10. Some banks may even request that you submit a paper copy of the information you entered along with a reference number and send it to the appropriate bank together with your KYC information.

The popularity of the Public Provident Fund in India has historically been fuelled by the benefits of both assured returns and tax savings.

The Public Provident Fund account is one of the most well-liked tax-saving investment alternatives in India, often preferred by investors or financial advisors due to its flexibility. The PPF programme offers a competitive interest rate, and there is no tax withholding required on interest-rate-related returns.

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