PPF Guide 2025: Interest Rate, Withdrawal Rules & Tax Benefits (80C)
Understanding PPF (Public Provident Fund) is essential for long-term wealth creation. With a 7.1% tax-free interest rate and sovereign guarantee, it remains India's favorite tax-saving tool.
However, missing the "5th of the Month" rule can cost you thousands in interest. This guide covers interest calculation, 80C benefits, withdrawal rules, and how to become a Crorepati using PPF extensions.
What is PPF (Public Provident Fund)?
PPF is a government-backed savings scheme with a 15-year lock-in. It offers guaranteed returns and complete tax exemption under the EEE (Exempt-Exempt-Exempt) status.
The "5th of the Month" Rule
The current rate is 7.1%. Interest is calculated monthly but credited annually on March 31st.
Interest is calculated on the lowest balance between the 5th and the last day of the month.
Pro Tip: Set SIP date to 1st or 2nd.
Eligibility & Rules
- Residents Only: Only Indian residents can open. NRIs cannot open new accounts.
- One Account: Only one account per individual is allowed.
- Minors: Parents can open for minors (Guardian operated).
- Limit: Max ₹1.5 Lakh per FY (Self + Minor combined).
Tax Benefits: EEE Advantage
EEE stands for Exempt-Exempt-Exempt. You pay Zero Tax at all three stages.
| Stage | Tax Treatment | Benefit |
|---|---|---|
| Investment | Section 80C | Deduction up to ₹1.5L |
| Interest | Tax-Free | 7.1% Fully Exempt |
| Maturity | Tax-Free | 100% Exempt |
Withdrawal, Loan & Closure
- From 3rd to 6th year.
- Up to 25% of balance.
- Interest: 1% p.a.
- From 7th year.
- Max 50% of balance.
- One withdrawal/year.
- After 5 years.
- Valid reasons only.
- Penalty: 1% interest cut.
PPF vs ELSS vs EPF
| Feature | PPF | ELSS | EPF |
|---|---|---|---|
| Returns | 7.1% (Fixed) | 12-15% (Var) | 8.25% (Fixed) |
| Lock-In | 15 Years | 3 Years | Retirement |
| Risk | Zero (Govt) | High (Market) | Zero (Govt) |
| Tax Status | EEE | EET (LTCG) | EEE |
How to Become a Crorepati
The magic of PPF lies in Extensions. After 15 years, you can extend indefinitely in blocks of 5 years.
| Tenure | Total Invested | Maturity (@7.1%) |
|---|---|---|
| 15 Years | ₹22.5 Lakh | ₹40.7 Lakh |
| 20 Years (1 Ext) | ₹30 Lakh | ₹66.6 Lakh |
| 25 Years (2 Ext) | ₹37.5 Lakh | ₹1.03 Crore |
Frequently Asked Questions (FAQs)
Final Verdict
PPF is the cornerstone of a safe retirement portfolio.
Fincado Research Team
Fact CheckedOur analysis is built on deep-dive research into RBI Benchmarks and lender-specific disclosures. We verify every interest rate and fee structure against real-world borrower approvals to ensure the highest level of accuracy for Indian home buyers.
Disclaimer: Interest rates are subject to change by the government. This guide is for educational purposes. Please consult a financial advisor for personalized advice.
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