Public Provident Fund (PPF)

The PPF is one of India’s most popular safe savings options. Accounts can be opened at post offices and many banks. Savers can deposit between a minimum and maximum amount each financial year, in a lump sum or instalments.

The account has a lock-in period of 15 years, which can be extended in blocks of five years. Partial withdrawals and loans against the balance are allowed under certain conditions after a few years.

The interest rate is set by the government each quarter. Under the older tax regime, contributions qualify for a tax deduction, and the interest and maturity amount are tax-free, a combination often described as exempt-exempt-exempt.

For example, someone who invests the maximum each year for 15 years builds a sizeable tax-free sum with no market risk, since the scheme is backed by the government.

The PPF suits conservative savers seeking safety and tax-free returns. The long lock-in reduces flexibility, and returns may lag those of equity investments over long periods. Tax benefits depend on which income tax regime the saver chooses, so current rules should be checked.