PPF
The Public Provident Fund (PPF) is a 15-year, government-backed long-term savings scheme available to Indian residents that earns a quarterly-set interest rate (currently 7.1% as of Q2 2026), qualifies for Section 80C deduction, and has tax-free maturity proceeds.
Understanding PPF
PPF can be opened at any post office, SBI, ICICI, HDFC, or other authorised banks. The interest rate is reset quarterly by the Ministry of Finance based on G-Sec yields — historically averaging 7.5–8% over the long term. Interest compounds annually and credits to your account on 31 March.
The 15-year lock-in is loose — partial withdrawals are allowed from year 7, full premature closure allowed from year 5 only for specific reasons (serious illness, higher education, NRI status). Loans against PPF are available from year 3.
Why it matters
PPF is one of the few Indian instruments that is risk-free, tax-free at maturity, and deductible at investment. For old-regime taxpayers in the 20% or 30% slab, it is the cleanest "set and forget" component of a long-term portfolio. The 15-year lock-in is also a feature for those who want long-horizon discipline rather than a bug.
Example
You contribute ₹1.5 lakh every year for 15 years at the current 7.1% interest rate. Total contribution: ₹22.5 lakh. Maturity value: ₹40.7 lakh — entirely tax-free. Add the Section 80C tax savings (~₹6.75 lakh over 15 years at 30% slab) and effective return crosses 10% post-tax.
You contribute ₹1.5 lakh every year for 15 years at the current 7.1% interest rate. Total contribution: ₹22.5 lakh. Maturity value: ₹40.7 lakh — entirely tax-free. Add the Section 80C tax savings (~₹6.75 lakh over 15 years at 30% slab) and effective return crosses 10% post-tax.