5 Invaluable Reasons the PPF Savings Scheme Makes Sense

The PPF Savings Scheme offered by the Government of India clearly brings with it a wide range of benefits. Yet, a lot of Indians miss out on investing in the PPF Savings Scheme.

Accordingly, the goal of this article is to highlight the benefits that the PPF or Public Provident Fund Scheme has to offer. Hopefully, with this article, you can make the most of this opportunity.

1. Assured Returns

Remember that the PPF Savings Scheme is guaranteed by the Government of India. So there is simply no way that anything will go wrong with your investments.

This by itself is one of the foremost reasons for which you should not miss out investing in PPF. Your money in this scheme is completely safe and secure. This is an investment that you do not have to worry about at all.

2. Minimum Requirements

Another reason for which the PPF Savings Scheme makes so much sense is the fact that it is easy to start. As a matter of fact, you can open your own PPF account with as little as 100 Rupees!

Moreover, the option to open and operate your very own PPF account is available at multiple locations including post offices, numerous public sector banks, and more. Therefore, location will never be a constraint as far as your PPF account is concerned.

Additionally, each year, the minimum amount required to be invested is also just 500 Rupees. Therefore, this is a savings and investment scheme that is well within the reach of practically every average Indian.

PPF Savings Scheme
The PPF or Public Provident Fund Savings Scheme is definitely one of the best investment options in India for small savings.

3. Tax-Free Returns on PPF Savings Scheme

In India, we increasingly find ourselves in a situation where practically every investment, profit, or income gets taxed in one form or the other. However, the PPF Savings Scheme is exempt from all forms of taxes.

First, the interest that you earn on your PPF investments (at the rate of 7.6% per year currently) is completely tax-free. Additionally, you are eligible to claim tax exemption on the amount which you invest in your PPF account. The maximum permissible amount that can be invested in a year in your PPF account is 1,500,000 Rupees and you can claim tax exemption on the entire amount if you manage to invest that much.

Finally, your partial withdrawals, allowed after 5 years, or a lump sum withdrawal at a subsequent date, such as on maturity, is also completely tax-free.

4. Cumulative Returns

The returns on PPF investments add up quickly because of their cumulative nature. For the first 5 years, you are not permitted to make any withdrawals at all. Yet, you have to keep investing at least 500 Rupees a year. This ensures that your investments begin accumulating.

When you make larger investments and also avoid withdrawing too often, the corpus that is created over a longer time period does tend to be substantial. This is all thanks to the cumulative returns we see on a compounded basis.

5. Loan Against PPF

Finally, there is a unique provision where you can also avail loans against PPF investments.

Typically, these are permitted from the third year up to about the sixth year. The maximum loan amount available is 25% of the amount held in your PPF account. Given the fact that your PPF investments serve as security, there is little to no documentation required on these loans.


The PPF Savings Scheme is clearly one of the best investment options in India for small savings. Given all the benefits that we have listed above, this is a unique saving and investment opportunity which you should definitely look to avail.

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