Public Provident Fund (PPF)
Government-backed 15-year savings with tax benefits.
What does it mean? (Simple)
PPF is a long-term savings scheme backed by the Government of India. It's one of the safest investment options available.
You can invest up to ₹1.5 lakh per year, and the entire amount qualifies for tax deduction under Section 80C. The interest earned is also tax-free, making it an "EEE" (Exempt-Exempt-Exempt) investment.
The main catch is the 15-year lock-in period. Partial withdrawals are allowed after 7 years, but you can't take all the money out until maturity.
Example with ₹ numbers
You invest ₹1,50,000 per year for 15 years at 7.1% interest. Your total investment of ₹22.5 lakh grows to approximately ₹40+ lakh, completely tax-free.
Common mistakes to avoid
- ⚠️Expecting liquidity (15-year lock-in is strict)
- ⚠️Not investing the full ₹1.5 lakh limit
- ⚠️Forgetting to extend after 15 years
Related terms
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⚠️ Educational only: This explanation is for learning purposes. Please consult a financial advisor for personalized advice.