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Investing term

PPF

A plain-English definition of PPF— what it means, how it works, and a simple example.

Quick answer

The Public Provident Fund (PPF) is a government-backed savings scheme with a 15-year lock-in, tax-free interest and Section 80C tax deductions.

PPF is one of India's safest ways to build long-term wealth. You can invest between ₹500 and ₹1.5 lakh a year, and the government sets the interest rate each quarter (around 7.1% recently), compounded annually.

Its biggest draw is the tax treatment. Contributions qualify for a Section 80C deduction, the interest is tax-free, and the maturity amount is tax-free too — a rare triple exemption known as EEE.

The catch is liquidity: the account matures in 15 years, though partial withdrawals are allowed from year seven. For example, investing ₹1.5 lakh a year for 15 years at 7.1% builds a corpus of roughly ₹40 lakh, entirely tax-free.

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EPFNPSELSSSection 80CFixed Deposit (FD)

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A note on accuracy:this definition is for general education, not personalised financial or tax advice. Figures are illustrative and rules can change — confirm anything that affects a real decision.