Public Provident Fund: Is PPF a smart investment tool for income tax savings and ITR filing? | Mint

Public Provident Fund (PPF) is a reliable mode of investing for people who want to save taxes while also earning substantial returns on their investments. The fact that PPF is exempt from taxes in all three phases—during investment, interest accumulation, and withdrawal—gives it an edge and makes it one of the best tax-saving options available under Section 80C of the Income Tax Act of 1961. The scheme’s appealing aspect is that the Government of India supports it, which lowers risk and secures investments.

“Thanks to PPF’s 15-year tenure, it benefits from compound interest. For example, investing ₹1.5 lakh every year will allow you to accumulate approximately ₹42.5 lakh after 15 years at a rate of 7.6%, which is evidently appealing for consistent savers. Considering its zero return in terms of inflation, alongside the guarantee the government offers its PPF holders, it can be assumed that PPF is an option for those who want a low-risk investment,” said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara Private Limited.

The PPF account can be extended in the block of five years

Furthermore, the facility allowing investors to extend the account after maturity in five-year blocks is a huge advantage. Siddharth Maurya added that PPFs play a critical role in achieving our small but smart investing initiatives.

PPF interest rate

The PPF interest rate is computed monthly and added to the total at the conclusion of each fiscal year. The Indian government sets the PPF interest rates at the end of each quarter. They are currently 7.1% p.a.

The PPF account can be opened in any post office, national bank, or private bank. The minimum deposit is ₹500, and the maximum in fiscal year is ₹1,50,000.

Siddharth Maurya states, “Investing in equity-linked schemes like ELSS can be more effective than PPF accounts alone, so combining PPF with equities is a smart approach for a robust financial plan.”

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Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.