The Public Provident Fund (PPF) is one of India’s most trusted long-term investment options, particularly for salaried individuals seeking to secure their financial future and retirement. Even though interest rates have remained the same for several years, PPF continues to attract investors because it is completely safe, offers tax-free returns, and provides guaranteed compounding benefits.
At the current interest rate of 7.1%, if you deposit the maximum Rs 1.5 lakh every year, your fund could grow to Rs 40.68 lakh in 15 years. Out of this, over Rs 18 lakh would come purely from tax-free interest.
Guaranteed returns through compounding
PPF is a long-term savings scheme backed by the Government of India. It offers guaranteed returns through the power of compounding. The interest rate has remained steady at 7.1% since April 2020. Its stability, safety, and EEE (Exempt-Exempt-Exempt) tax status make it a great choice for investors looking for secure and tax-saving options.
Opening a PPF account is very easy. You can do it at any bank or post office. Any Indian citizen can open an account in their own name or in the name of their minor child. You need basic KYC documents like Aadhaar, PAN, address proof, and a nominee form. Investors can deposit a minimum of Rs 500 and a maximum of Rs 1.5 lakh in a year, either in a single installment or in multiple installments, as per PPF rules.
PPF calculator: how much interest you can earn
If the current interest rate continues, you can earn over Rs 18 lakh in interest when your PPF account matures. This is possible only if you invest the maximum allowed limit. You can deposit up to Rs 1.5 lakh in a financial year.
PPF investment calculation:
Deposit per financial year: Rs 1.5 lakh
Interest rate: 7.1% per annum (compounded annually)
Total investment over 15 years: Rs 22,50,000
Maturity fund after 15 years: Rs 40,68,209
Interest earned: Rs 18,18,209
EEE – a completely tax-free scheme
PPF gives you big tax benefits as it falls under the “EEE” (Exempt-Exempt-Exempt) category. You can claim a tax deduction on deposits of up to Rs 1.5 lakh in a financial year. The interest earned is also tax-free, and the maturity amount you receive at the end of the term is not taxable either. In short, PPF is a completely tax-free investment.
How to open a PPF account
Any Indian citizen can open a PPF account in their own name or in the name of their child. You can do this both offline and online. The documents required are: KYC documents to verify identity, such as Aadhaar, Voter ID, or Driving License; PAN card; Address proof; Nominee declaration form; and Passport-size photograph.
