PPF in Post Office: What It Is, How It Works & Key Benefits

What is a Public Provident Fund Account?

PPF stands for Public Provident Fund, a government-backed long-term savings and investment scheme. The attractive interest rates and tax benefits of PPF are major reasons for its popularity. A PPF account lets you enjoy risk-free fund growth over the years.

Using Aadhar-based biometric eKYC authentication, individuals can easily open a PPF account in a post office. An individual can only have one PPF account, and joint accounts are not allowed under PPF. For the financial year 2025-26, the post office PPF interest rate is 7.1%.

Note: The interest is earned on the minimum balance of the account between the 5th and the last date of a particular month, and on 31st March of each year, the interest earned is credited.

How does the PPF Account work?

Eligible individuals can open a PPF account in the post office either online or offline. A minimum investment of ₹100 is required to open a PPF account. Further, a minimum investment of ₹500/year is required to keep the account active, with a maximum of ₹1.5 lakhs/year.

During every quarter, the government revises the PPF interest rate. One of the best parts of a public provident fund account is that it earns compounded interest every year, which increases the amount substantially. The interest is credited every year. The account has a 15-year lock-in period. You can also extend the account's tenure in 5-year increments.

Note: After 15 years, you may choose to extend the tenure even without contributing any further.

Benefits of a PPF Account

Some of the key benefits of the PPF scheme in post offices are:

Corpus Building

PPF accounts can be opened with a nominal amount. Over the years, it earns compounded interest, so even small investments can amount to a hefty sum by the end of the tenure. So, PPF can be a good choice if you want to build a corpus over a long tenure.

Partial Withdrawal

A PPF account also lets you partially withdraw the amount in case of emergencies. After completing 5 years, you can withdraw up to 50% of the account balance. In cases where an individual suffers from a major illness or is seeking higher education, premature closure of the account may also be permitted.

Risk-averse Option

Any individual who wants to invest and build a corpus but doesn't want to risk may find PPF as an ideal option. This scheme is risk-averse and offers guaranteed returns. Thus, most risk-averse people prefer PPF, which also helps diversify their investment portfolio.

Low Minimum Investment

The minimum annual investment for a PPF account is just ₹500. Thus, it becomes easier for many people to be a part of this scheme and build a financially safer future. You may either invest in a lump sum or in 12 instalments per year.

Loan Against PPF

If you have a PPF account in the post office, you can also borrow a loan against the balance. You don't have to dip into your savings for immediate cash needs. Individuals can get a loan of up to 25% of the PPF account balance. Note that a loan against PPF is only available after the account has completed 1 year.

Note: Non-Resident Indians (NRIs) are not eligible to open a PPF account in India.

Tax Benefits of PP Accounts in the Post Office

Growth of funds at low risk is not the only striking benefit of PPF. The tax benefits are yet another highlighting benefit of PPF accounts in post offices.

Under the old tax regime, individuals can claim a tax deduction of up to ₹1.5 lakhs under Section 80C of the Income Tax Act of 1961. Additionally, the interest earned on up to ₹5 lakhs annual contributions in PPF is exempt from taxation.

Note: PPF account contributions made on or after 21st April 2021 are fully exempt from taxation.

How to Open a PPF Account in the Post Office?

By following the offline or online method, you can quickly open a PPF account in a post office.

Online Method

Log in to your official bank account and proceed with the PPF account. To create an account, you will have to fill out and submit the form along with the required documents. In the end, make the payment to wind up.

Offline Method

To open a PPF account offline, you need to visit a nearby post office and collect the application form. You may also download it online. Fill and submit the form along with the required documents at the office. After successful payment and verification, the account will be opened.

To Conclude

Public Provident Fund is one of the most attractive savings schemes by the government of India. If you are also planning to build a solid financial corpus over 15 years, PPF can be a good choice. With low risk, guaranteed interest, compounded interest, and tax benefits, PPF is one of the ideal savings schemes. So, start planning your PPF account in the post office for a financially stable future. At Jio Insurance Broking, we are here to assist with your savings and investments for a hassle-free experience.

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