PPF( Public Provident Fund) was implemented to mobilize small contributions for investment and return. It was implemented in India in 1968 and can be referred to as an investment vehicle that enables one to accumulate retirement funds while reducing yearly taxes. Those who are looking for [safe investing options can opt for PPF to save Taxes](https://pensionbox.in/blog/Minimizing-Tax-Deductions:-A-Guide-to-Legal-Tax-Savings) and they will also gain good returns. 

## Significance of PPF

[Public Provident Fund ( PPF)](https://www.nsiindia.gov.in/(S(hwobxp55d4sirp3u0rxbzfvc))/InternalPage.aspx?Id_Pk=55) is considered an excellent investment option because it is a safe investment option. Even though the returns of PPF are not very high, they offer stability. It is very beneficial for those who are afraid of taking risks. Also investing in PPF provides diversification options for your portfolio. 

## What is a PPF account?

It is an amount invested for a long-term investment option that offers an attractive rate of interest. It also gave an excellent return on the amount invested. If you want to invest in a PPF then you have to open a PPF account under this scheme. 

[PPF gives you tax benefits](https://pensionbox.in/product/ppf) as the interest earned and the return are excluded from tax. Also, the amount that is deposited in the PPF account throughout the year is deductible from taxable income under section 80 C.

## Features of the PPF account

### The following are the essential features of a PPF account. 

- **Tenure:-** There is a minimum tenure of 15  years. It can be increased every 5 years as per the account holder's wish. 

- **Investment limits:** PPF account holders can invest Rs 500 per year to 1.5 lakh per year. Individuals can invest in lumpsum or 12 installments.

- **Deposit frequency:-** Individuals should make deposits at least once in 15 years. 

- **Mode of deposit:-** It's easy to deposit funds in a PPF account. One can either deposit it via cash, cheque, demand draft (DD)  or through an online fund transfer. 

- **Nomination:-** Individuals can designate a nominee for their account at the time of account opening. However, it is not necessary to do it when you are opening the account. You can also do it later. 

- **Joint Account:-** A PPF can't be opened jointly. It is opened only in the name of one individual. 

- **Risk Factor:-** The Indian Government supports PPF accounts. It offers guaranteed, safe returns as well as complete capital protection. Minimal element of risk involved in a PPF account. It is used as a diversification tool for an investor's portfolio. 

- **Tax benefits:** According to section 80 C of the Tax Act 1961 the interest on the PPF account as well as the maturity amount are tax-free. 

- **Partial withdrawal:** Individuals can withdraw the PPF amount partially from the seventh year onwards. 

## What is the interest rate on PPF? 

In the present scenarios, the interest on the PPF account is 7.1% which is compounded annually. 

The interest on the PPF account is set by the Finance ministry every year which is paid on 31st March. The interest is calculated on the lowest balance between 
the close of the fifth day and the last of every month. 

Also, you can use the pension box PPF calculator to calculate the returns you expect on investing a certain amount in a PPF account. 

## How does a PPF account work?

The PPF account is opened for a fixed lock-in period for 15 years PPF account can be opened by an adult for self or on behalf of a minor. Individuals can deposit in an account ranging from Rs. 500 up to 1.5 lakhs per year. 

You can deposit in a lump sum or installments there is no restriction on the number of installments every financial year. 

The only thing is that the deposit must be made once every year throughout the tenure. The deposits made are exempted from income tax under section 80 C of the Tax Act. 

The only compulsion is that you are required to deposit only 500 per financial year to keep your account active. 

By chance, due to any reason you don't make a single deposit in your PPF account through the year then the account will be discontinued. Individuals will be required to pay an amount of rupees five hundred again to reactivate it. 

This year the interest rate on PPF is 7.1% applied to the deposit and it is compounded annually. Individuals can get loans based on their PPF account. For some specific conditions withdrawals are allowed from PPF accounts. 

When the tenure period of 15 years is over you can extend the account tenure or choose to close it. 

## What is the eligibility for a PPF account? 

- Only Indian citizens can invest in PPF in India. 
- One citizen can have only one PPF account. However, if the other account is in the name of the minor.
- NRIs and HUFs can't open a PPF account. In case NRI has an already opened PPF account that will continue till the end of the tenure, but once the tenure is over it cannot be extended. 

PPF account is the best long-term investment option for those who want to take less risk. Since it is backed by the government, it is trusted by investors and gives good interest and returns. Also, it has tax benefits both on the interest and the amount. Use the [PensionBox's pension calculator](https://pensionbox.in/calculators/pensionbox-calculator) and start your journey from now onwards.

PPF( Public Provident Fund) was implemented to mobilize small contributions for investment and return. It was implemented in India in 1968 and can be referred to as an investment vehicle that enables one to accumulate retirement funds while reducing yearly taxes. Those who are looking for safe investing options can opt for PPF to save Taxes and they will also gain good returns. 

PPF Account: A Long-Term Savings Solution for Individuals

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