The Public Provident Fund (PPF) has been a staple of Indian savings for decades. With a government guarantee, tax-free interest of around 7%+, and 80C deduction, it still earns its place — but it isn't right for every rupee.
Why PPF still works
- Completely safe — sovereign-backed, no market risk
- Interest is fully tax-free, which lifts the effective return for high earners
- Counts toward the ₹1.5 lakh 80C deduction (old regime)
- Forces long-term discipline with a 15-year term (extendable)
Where it falls short
PPF's ~7%+ won't build serious long-term wealth the way equity can — over 15+ years, a diversified equity SIP has historically outpaced it by a wide margin. The 15-year lock-in and ₹1.5 lakh yearly cap also limit it. And under the new tax regime, the 80C benefit doesn't apply.
See what regular PPF contributions grow to in the PPF calculator.
Where to go next
FAQs
PPF pays a government-set rate revised quarterly, recently around 7%+ per year, and the interest is fully tax-free. Always confirm the current quarter's rate, as it can change.
They serve different roles. PPF is safe, tax-free and steady but limited in growth; equity mutual funds have historically delivered much higher long-term returns with volatility. Most people benefit from holding both — PPF for safety, equity for growth.
Yes — PPF enjoys EEE status: contributions qualify for 80C (old regime), the interest is tax-free, and the maturity amount is tax-free too. That tax-free compounding is a big part of its appeal.
Educational information, not financial advice. Figures are illustrative and assume the stated return or rate; actual outcomes vary and aren't guaranteed. Run your own numbers before deciding.