PPF (Public Provident Fund): Features & Eligibility

Warren Buffett once said, ‘Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.’ Regular and systematic savings is the key to wealth creation. Public Provident Fund is a long term investment option for investors searching for safe financial instruments. It comes with the dual benefit of tax saving and wealth accumulation. PPF is backed by the government and hence scores high on safety.

What are the features?

  • The investments can either be made in 12 instalments or in lump-sum. The minimum number of instalments in a year is 1 and the maximum number of instalments cannot exceed 12.
  • Investments can be made in cash or cheque. In case of cheque, the date of realization of a cheque in Govt. account shall be the date of opening of an account.
  • PPF account gives a benefit of a tax deduction on deposit, assured returns on investments and tax-free withdrawal on maturity.
  • Maturity period is 15 years but the same can be extended within one year of maturity for a further 5 years.
  • An account can be opened for a minor as well. One condition for this is that the maximum investment limit should be the addition of balance in all accounts. There is no facility for opening a joint account.
  • A nominee can be added at any time i.e at the time of opening and also after the opening of an account. An account can be transferred from one post office to another.
  • Premature closure is not allowed before 15 years i.e. you are not allowed to close your PPF account until it matures.
  • Loan facility is available from a 3rd financial year from the year of opening account.
  • Partial withdrawal facility can be availed from 7th financial year onwards

Who can invest in PPF?

An individual can invest in PPF. The minimum investment amount is Rs 500/- and the maximum amount is Rs 1,50,000/- for a year. It is suitable for freelancers and proprietors. Deposits made under PPF qualify for deductions under Sec. 80C and interest earned are tax-free. 


Is interest on PPF taxable?

No. The deposits fall under the EEE (Exempt, Exempt, Exempt) tax category. This means that:
– Deposits made under PPF scheme are allowed as deduction under section 80C.
– Interest earned on these deposits in exempt from tax; &
– Amount withdrawn from the PPF account is also exempt from any tax.

How many PPF account can I open?

You can open one PPF account every 15 years. However, at any given time, you can only have one account in your name.

Can I have both EPF and PPF account?

Yes. It is plausible for an Individual to have an EPF and a PPF account at the same time.

Got Questions? Ask Away!

  1. Hey @sushil_verma

    There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.

  2. Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

    For eg,

    • Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
    • Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
    • Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.

    Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.

  3. The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).

    Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).

    As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.

  4. Hey @Sharath_thomas , we have updated the content according to the appropriate assessment year. Thanks for the feedback.

  5. Hey @shindeonkar95

    In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.

    However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.

    Hope, it helps!

  6. Hello,

    Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?

    There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?

    I couldn’t find anything on this. Any help is appreciated.

  7. Hello @Veejayy,

    Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.

    Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.

    These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!

    Also, interest earned on these bonds will be taxable.

    Hope this helps!

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