PPF (Public Provident Fund)
Definition
A government-backed savings scheme with a 15-year lock-in, offering fully tax-free EEE status interest and gains.
Key Takeaways
- PPF is a government-backed savings scheme with a mandatory 15-year lock-in period.
- Carries 'EEE' tax status, making contributions, interest, and withdrawals 100% tax-free.
- Annual contribution is capped between a minimum of ₹500 and a maximum of ₹1.5 Lakhs.
- Interest rates are set quarterly by the Ministry of Finance.
Detailed Explanation
The Public Provident Fund (PPF) is a government-backed, long-term savings-cum-investment scheme in India. It is highly popular due to its safety and 'EEE' (Exempt-Exempt-Exempt) tax status: contributions are tax-deductible under Section 80C, interest earned is tax-free, and withdrawals at maturity are completely tax-free.
PPF accounts have a mandatory lock-in period of 15 years, which can be extended in blocks of 5 years. The interest rate is reviewed and set by the government quarterly (currently around 7.10% per annum). The minimum annual contribution is ₹500, and the maximum is ₹1,50,000. It remains one of the safest long-term compounding options for risk-averse Indian savers.