PPF - Public Provident Fund

5paisa Research Team Date: 24 Nov, 2022 01:00 PM IST


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PPF full-form is Public Provident Fund. It was launched in India during the 1960s to encourage small savings in the form of investments with returns. 

Sometimes referred to as the savings-plus-tax-savings investment tool that lets you save plenty on annual taxes while preparing a retirement corpus for you. 

Opening a PPF account is the best decision for any individual searching for a risk-free investment opportunity to get assured returns and save on taxes. 

Here is a table representing an overview of PPF: 

Interest Rate



15 years (renewable in blocks of five years)

Investment Amount

Min: INR 500 - Max: INR 1.5 Lac p.a

Return on Maturity

Varies depending on the investment tenure


Eligibility To Open a PPF Account

To open a PPF account, you must meet specific eligibility requirements. The Income Tax Act’s Section 80C tax incentives are also available to you once you create a user account. 

Consequently, dividend and interest income are not subject to income tax. The following are the requirements for opening a PPF account that you must know before investing.

●    PPF accounts can only be opened by Indian nationals who live in the nation.
●    People who are above 18 years old are eligible for PPF benefits. The maximum age to open a PPF account is indefinite.
●    There is a limit to the number of PPF accounts you can open. You cannot open a second PPF account even if you meet all eligibility requirements.
●    In addition to being of legal age to open a PPF account, you must submit specific supporting documentation.

How To Open a PPF Account?

Steps To Open a PPF Account Offline:

Do you want to avoid the online procedure of opening a PPF account? If so, the offline steps are no big hassle. Simply follow these steps for quick results: 

●    Step 1: First, arrange and prepare a file of all the documents needed for a PPF account opening. Things would be more seamless if you already have a savings account in the bank where you want to open the PPF account. 
●    Step 2: Go and visit the closest branch of your bank.
    Step 3: The bank clerk will provide an application form and may even guide what to fill out. Then, follow the instructions, fill out, and submit the application form. 
    Step 4: Ensure you attest all the relevant documentation and your PPF application form. 

Steps To Open a PPF Account In The Post Office 

Despite going for the digital option to open a Public Provident Fund account, you can choose to do the same at your nearest post office. Here are the steps to open a PPF account in the post office: 

●    Step 1: Go to the post office of your locality. To enjoy seamless, hassle-free account activation, it’s best already to have a savings account in the post office.
●    Step 2: The post office staff will provide an application form. Fill it out and ensure providing self-attested photocopies of the relevant documents. Plus, don’t forget to take the original copies of every document to avoid any hassle during the verification procedure.  
●    Step 3: The Post Office needs you to make the PPF account opening payment via either a demand draft or a cheque. It requires only INR 500 to get started. 
●    Step 4: Once the account starts running, you get entitled to a passbook from the post office. 
Fact Alert: You Could’ve Applied For The Same Digitally!
Another seamless way to open a Public Provident Fund (PPF) account is to use the India Post Payment Bank mobile app. Things become more simplified with this online account opening method. 

Once you install the app, get started with these steps: 

●    Step 1: Click on the app icon, and set your profile.
●    Step 2: Navigate and find the section named ‘Department of Post (DOP) Services.’
●    Step 3: Go there, and choose ‘Public Provident Fund’ as your account type. 
●    Step 4: Fill in your DOP customer ID and PPF account number and submit. 
●    Step 5: Fill in the amount you want to deposit, and finally, click on the ‘Pay’ option. 
●    Step 6: Once the transfer is successful, the app notifies them all. 

What Is The Interest Rate on PPF?

To entice consumers to save money for a financially stable future, PPF interest rates are typically set higher than the standard Fixed Deposit rates provided by banking institutions. For the 2022-23 financial year’s third quarter (Oct ’22 - Dec’ 22), the PPF account interest rate is 7.1%. 

The Finance Ministry annually determines the PPF interest rate, which is received on March 31. The interest calculation is done based on the minimum balance that is accessible between the fifth day’s closing and the last day of the month. 

Here is a table representing the PPF interest rate decided by the Government of India in the previous few years: 


Interest Rate (Per Annum)

Oct 2018 - Dec 2018


Jan 2019 - Mar 2019


Apr 2019 - Jun 2019


Jul 2019 - Sept 2019


Oct 2019 - Dec 2019


Jan 2020 - Mar 2020


Apr 2020 - Jun 2020


Jul 2020 - Sept 2020


Oct 2020 - Dec 2020


Jan 2021 - Mar 2021


Apr 2021 - Jun 2021


Jul 2021 - Sept 2021


Oct 2021 - Dec 2021


Jan 2022 - Mar 2022


Mar 2022 - Sept 2022



Who Is Eligible To Invest In PPF

●    Individuals cannot open a Hindu Undivided Family (HUF) or Joint account.
●    Anywhere the bank provides services, there is a choice to create an account online.
●    There is no upper age restriction for opening a PPF account.
●    PPF accounts can be opened by Indian citizens over the age of 18 in their own favor, on behalf of a child, or on behalf of any other member of their household.
●    A child or young person under the age of 18 can open a PPF account in-person (offline) or online. In such a scenario, the aggregate PPF deposits for any given fiscal year cannot surpass 1.5 lakhs in the accounts of the child and guardian/minor. 
●    Additionally, grandparents cannot register a PPF account for their grandkids either offline or online.

Additionally, you can calculate the returns on a specific investment in a PPF account using the PPF calculator.

Few Crucial PPF Characteristics:

    Investment Limitations: PPF has a minimum spend requirement of Rs. 500 and a maximum investment restriction per fiscal year of Rs. 1.5 lakh. A total of 12 installments or a severance package can be used to make investments.
●    Deposit Requirement: A PPF account must have at least one deposit made each year for 15 years.
●    Nomination: A PPF account owner may name a candidate for his account when the account is opened or at any other time.
●    Risk: PPF offers assured, risk-free earnings and total capital protection because the Indian government sponsors it. Owning a PPF account carries just a small amount of risk.
●    Duration: The PPF has a minimum term of 15 years, which may be increased by five-year increments at your discretion.
●    Opening Balance: Only Rs. 100 is required to open a PPF account. Investments made annually over Rs 1.5 lakh would not be entitled to tax reductions or dividends.
●    Deposit Methods: You can deposit money into a PPF account using cash, checks, demand drafts (DD), or online fund transfers.
●    Joint Accounts: Only one person’s name may be on a PPF account. It is not permitted to open an account in joint names.

How To Open a PPF Account Online?

A well-liked long-term savings and investment option is the PPF account. Tax advantages are also available to account holders who make investments. In addition to banks, post offices also allow the opening of PPF accounts. People nowadays can create a PPF account online to enjoy a seamless process.

Prerequisites To Open a PPF Account Online: 

Here are the conditions that need to be met and followed for the seamless opening of a PPF account: 

●    You will need a savings bank account with the bank where you want to open the PPF account.
●    Your bank account must have an active net banking facility.
●    Your savings account must be linked with your Aadhaar number. 
●    Your Aadhaar must be linked with your registered mobile number. 

Steps To Open a PPF Account Online 

The following is a detailed description of how to create a PPF account online:
●    Logging into your online banking portal is the first step.
●    Next, select the link that enables you to create a new PPF account.
●    There may be a choice between a minor account and a self-account at some banks. Select the appropriate choice.
●    By providing the nominee information, bank information, etc., you can begin setting up the PPF account. Your PAN and other information will be visible. You should ensure that every piece of information on the screen is accurate.
●    The money to be invested into the PPF account must be provided after the parameters have been submitted.
●    At some banks, standard procedures could be established so that funds can be periodically deposited in lump sums or at regular intervals.
●    The subsequent step may involve entering the transaction passcode, or the OTP issued to your registered phone number.
●    After the procedure mentioned above is finished, the PPF will be created. For future use, you can write down the account number that is visible on the screen.
●    Nevertheless, for some banks, you’ll need to print out the entered information together with the registration number and present it along with the KYC information at the institution.

How To Link Your Aadhaar Number With a PPF Account Online?

You can use your Indian Post Bank Account to link your Aadhaar to several savings plans. In this regard, you should take the following actions:

The Offline Method: 

●    Step 1: First, visit the post office branch that is closest to you with a photocopy of your post office account passbook and Aadhaar card.
●    Step 2: Take the Aadhaar linking form from your post office branch, complete it, and submit it together with a photocopy of your Aadhaar card.
●    Step 3: Once you apply, you will receive a confirmation that your request to link your Post Office Account with your Aadhaar has been received.
●    Step 4: After the post office has processed your application, an SMS message will be sent to the registered cellphone number on your account.

The Online Method: 

●    Step 1: Sign in and visit your net banking account page. 
●    Step 2: You’ll find an option “Registration of Aadhaar Number in Internet Banking.” Click on it. 
●    Step 3: Fill in your Aadhaar number and then press the ‘Confirm’ button. 
●    Step 4: Link the Aadhaar number by selecting the PPF account. 
●    Step 5: Go to the homepage, click on ‘Inquiry’ and check whether the Aadhaar linking request has been made. 

Tax Benefits of Investing In PPF

The Income Tax Act, 1961 Section 80(C) allows for tax exemptions for annual PPF payments. Anybody may use the exclusions up to the same amount. From the financial year 2019–20, the PPF investment deduction cap has surged from INR 1 lac to INR 1.5 lacs.

Because the maximum annual investment for PPF accounts is INR 1.5 lacs, all contributions made to your PPF account are eligible for deductions under Section 80C. A maximum exemption of INR 1.5 lacs annually, including all investment tools, is permitted under Section 80C.

PPF accounts also provide additional tax advantages. Wealth tax isn’t really applied to PPF accounts or earnings, while interest income from PPF deposits is tax-free. PPF accounts thus provide you with three types of exemptions: a wealth tax exemption, tax-free returns, and a deposit deduction.

In addition, there is no tax due when the accrued funds and interest are withdrawn. The fact that a PPF account cannot be terminated before maturity should not be overlooked.

On the contrary, a PPF account may be moved between points of designation. But keep in mind that you cannot prematurely close a PPF account. The candidates can only request the account be closed in the event of the account owner’s death.

PPF Tax Saving 

Let’s say that your annual income is INR 5 lacs. You will receive the following benefits both with and without claiming deductions under Section 80C:

With Deductions

Without Deductions


INR 5 lacs

INR 5 lacs


Exempted Income

INR 2.5 lacs

INR 2.5 lacs

Deductions (under Section 80C)

INR 1.5 lacs


Taxable Income

INR (5-2.5-1.5) = INR 1 lac

INR (5-2.5) = INR 2.5 lacs

Income Tax @20%

INR 20,000

INR 50,000

Cess @3%

INR 600

INR 1500

Net Tax

INR 20,600

INR 51,500


You may be able to avoid paying Rs.30,900 in income taxes every year by investing in a financial tool like a PPF. Additionally, the advantages of the interest earnings while maintaining a PPF investment are not included in this. PPF purchases are thus a fantastic way for everyone to save money in the long run.

PPF Claim Deductions:

You must include information about your PPF contributions during a given year in your ITR file to claim such expenditures as deductions under Section 80C. You can insert your investment amount and any documentary evidence in the space designated for deductions under section 80C.

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Frequently Asked Questions

No. All of the money in the account does not have to be redeemed when it matures. The period of the account may be prolonged or retained for as much as the owner chooses to use it. The account may be extended once for a total of five years. Extensions can be obtained either by making additional money contributions or without doing so.

There isn't any limitation on the number of times you can extend the tenure of the PPF account if you continue to extend it in the blocks or intervals of five years. Nevertheless, you can only stretch and prolong the PPF investment tenure after completing every block. 

No, any interest calculation won’t be performed for the financial year(s) your account stays inactive. Interest will be computed on balance retained at the time of account revival.

Only sums up to INR 1.5 lacs will be eligible for calculation and interest payment in any given year. Only the total yearly investment limitation, which is INR 1.5 lac per year, would be taken into account for all PPF computations.

Only after five years have passed can a PPF account be closed by an investor. In addition, a number of requirements must be met before the account can be closed.