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The investments under the PPF scheme have been capped at Rs 1.5 lakh in a financial year.
The government also allows investors to extend their PPF savings. (Representative Image)
Public Provident Fund (PPF) is one of the most popular long-term savings schemes in India. It offers secured returns with tax benefits. The government-backed scheme comes with a 15-year lock-in period. The long-term investment horizon helps people build a sizable corpus fund with even a modest amount monthly or at regular intervals. However, the investments under the PPF scheme have been capped at Rs 1.5 lakh in a financial year.
Moreover, the contributions made under this scheme as well as the interest earned and maturity amount, are all completely tax-free. This makes the PPF scheme highly attractive as many people use this tax-saving tool as a part of their retirement savings.
The government also allows investors to extend their PPF savings beyond the 15-year period. This means, after the initial maturity period, the investors can increase the investment tenure in blocks of 5 years each, with or without contributions.
At present, the PPF interest rate stands at 7.1% (for the April-June quarter of 2025). The interest rate on the PPF scheme is reviewed and fixed by the government at regular intervals. You can open a PPF account at any bank or post office. In order to keep your PPF account active, a contribution of at least Rs 500 in a financial year is needed.
How Is Interest Calculated On PF Balance?
To calculate the interest rate on the PPF balance, the lowest balance between the fifth day and the last day of the month is taken into account. The interest is then computed based on the lowest balance.
Due to this norm, it is important to understand when to deposit your PPF amount, even though there is no specific due date. To maximise returns on your PPF contribution, one can consider depositing the amount within the 5th day of the month.
If one wants to submit their PPF contribution as a lump sum deposit, it must be done between April 1 and 5 of the financial year. This helps in maximising returns due to the compound interest rates.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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Delhi, India, India
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