Money Basics · Retirement (yes, already)

PPF

PPF (Public Provident Fund) is a government-backed savings scheme. It's boring. It's long. And it is EEE, no tax at contribution, no tax on the growth, no tax at withdrawal, which is why its headline rate understates what it actually does for a high-slab earner.

The basics

• Minimum: ₹500/year. Maximum: ₹1.5 lakh/year.
• Tenure: 15 years (extendable in 5-year blocks)
• Interest rate as of July 2026: 7.1% (set by the government and revised every quarter)
• Interest calculated monthly on the lowest balance between the 5th and last day of the month. Deposit before the 5th to maximise interest.

The EEE tax status

PPF is one of the last EEE instruments in India:

• E: contributions deductible under 80C (Exempt at contribution)
• E: interest earned is completely tax-free (Exempt on growth)
• E: maturity amount is completely tax-free (Exempt at withdrawal)

> A 7.1% return that is COMPLETELY TAX-FREE is equivalent to 10.1% for a 30% bracket earner on a taxable instrument. That's better than most FDs on a post-tax basis.

The lock-in reality

15-year lock-in sounds extreme. But partial withdrawals are allowed from year 7 onwards. Loans against PPF are available from years 3–6. You can contribute for 15 years, then extend indefinitely in 5-year blocks while continuing to earn interest.

7.1%Current PPF rate, tax-free

15 yearsMinimum lock-in period

Year 7When partial withdrawals begin

Who should use PPF

PPF is ideal for the fixed-income portion of your retirement portfolio. It's government-backed (zero default risk), tax-free, and better than most FDs after tax. Open one in your 20s and let it compound for 15–30 years.

PPF terms are set centrally and are identical at every bank and post office that offers it, so there is nothing to compare between providers. Accounts can be opened online through net banking.

Takeaway. PPF is EEE. Contributions, interest, and maturity all tax-free. At 7.1% tax-free, it outperforms most FDs for high-bracket earners. Open one early and keep it running.