What is PPF?
Public Provident Fund (PPF) is a 15-year government-backed savings scheme that offers tax-free returns. It's one of the few investments where the principal, interest and maturity value are all tax-free (EEE category). The current rate (reviewed every quarter) is around 7.1% per annum, compounded yearly. Maximum deposit is ₹1.5 lakh per financial year.
Why PPF is Still Relevant
Even in a world of equity mutual funds, PPF plays a vital role in a balanced portfolio. It provides guaranteed, tax-free, inflation-beating returns for the debt portion of your corpus. Most financial planners suggest maxing out the ₹1.5 lakh annual limit before considering other debt options.
Frequently Asked Questions
Can I withdraw PPF before 15 years?
Partial withdrawal is allowed from the 7th year. Full closure is possible from the 5th year in specific circumstances.
Is PPF interest taxable?
No, PPF interest and maturity are fully tax-free.
Can I extend PPF beyond 15 years?
Yes, in blocks of 5 years, with or without further contributions.