The Public Provident Fund (PPF) is one of the most trusted, government-backed savings schemes in India. Many investors wonder: “How much money will I make in 15 years by investing in PPF, and how much tax can I save along the way?” In this article, we’ll break down the PPF benefits, returns, and tax savings in a simple, easy-to-understand way, while also offering deep insights for professionals and serious investors.
Tax Savings by Investing in PPF
| Feature | Details |
|---|---|
| Scheme Name | Public Provident Fund (PPF) |
| Interest Rate (as of March 2025) | 7.1% p.a. (compounded annually) |
| Investment Tenure | 15 Years (Can be extended in blocks of 5 years) |
| Maximum Annual Contribution | ₹1,50,000 per financial year |
| Minimum Annual Contribution | ₹500 |
| Total Investment Over 15 Years | ₹15,00,000 (if investing ₹1,00,000 annually) |
| Approximate Interest Earned | ₹12,12,139 (for ₹1,00,000 yearly investment @7.1% rate) |
| Maturity Amount | ₹27,12,139 |
| Tax Benefits | Tax deduction up to ₹1.5 lakh under Section 80C + EEE Status (Exempt-Exempt-Exempt) |
| Official PPF Information | India Post |
The PPF scheme is a powerful tool for long-term wealth creation with guaranteed returns and unbeatable tax benefits. If you invest ₹1 lakh per year consistently for 15 years, you stand to earn over ₹12 lakh in interest, with a total maturity corpus of ₹27 lakh – completely tax-free!
What is PPF?
The Public Provident Fund (PPF) is a savings scheme launched by the Government of India in 1968. It offers a safe, stable, and attractive return with the added benefit of tax savings.
The scheme is ideal for individuals who want long-term wealth creation without the risk associated with stock markets. Plus, since it’s backed by the government, it comes with zero default risk.
see also: How Much Money Will You Get If You Deposit ₹10,000 Every Month?
How Much Will You Earn in 15 Years?
Let’s break it down with a simple example:
Example Scenario:
- Annual Investment: ₹1,00,000
- Interest Rate: 7.1% per annum (current rate)
- Investment Period: 15 years
Using the PPF Formula:
A = P × [(1 + r)^n – 1] ÷ r
Where:
- A = Maturity Amount
- P = Annual investment (₹1,00,000)
- r = Interest rate (7.1% or 0.071)
- n = Number of years (15)
Final Calculation:
- Total Investment: ₹15,00,000
- Interest Earned: ₹12,12,139
- Maturity Amount: ₹27,12,139
Note: This calculation assumes you invest ₹1,00,000 at the start of each financial year and no withdrawals are made during the tenure.
You’ll have over ₹27 lakh after 15 years!
You can use online calculators like ICICI PPF Calculator for exact figures based on different inputs.
Tax Savings Over 15 Years
PPF offers triple tax benefits under the EEE (Exempt-Exempt-Exempt) category:
1. Contribution Exemption:
- You can claim up to ₹1,50,000 annually as a deduction under Section 80C of the Income Tax Act.
2. Interest Exemption:
- The interest earned yearly is completely tax-free.
3. Maturity Exemption:
- The maturity amount is also 100% tax-free.
Total Tax Saved:
Assuming you’re in the 30% tax bracket and invest ₹1,50,000 every year:
- Annual Tax Saved: ₹45,000 (30% of ₹1,50,000)
- Total Tax Saved Over 15 Years: ₹6,75,000
That’s significant tax relief, along with stable returns.
Benefits of Investing in PPF
| Pros | Details |
|---|---|
| Risk-Free Investment | Backed by the Government of India, with zero default risk. |
| Attractive Interest Rates | Higher than most fixed deposits and stable compared to market-linked options. |
| Tax-Free Returns | Interest and maturity proceeds are fully exempt from tax. |
| Long-Term Wealth Creation | Perfect for long-term financial goals like retirement, child’s education, or marriage. |
| Loan & Withdrawal Facility | Partial withdrawals allowed after the 5th year, plus loan facility available from the 3rd year. |
Who Should Invest in PPF?
PPF is suitable for:
- Salaried Individuals: Looking for long-term, tax-saving options.
- Parents: Planning to secure their child’s future education/marriage expenses.
- Retirees: Seeking safe, stable income without worrying about market volatility.
- Professionals & Business Owners: Wanting to diversify investments and save on taxes.
How to Open a PPF Account
- Eligibility:
- Any Indian resident (above 18 years) can open a PPF account.
- One account per person. Minors can have accounts opened by their parents/guardians.
- Where to Open:
- Any post office or major banks like SBI, ICICI, HDFC, etc.
- Documents Required:
- PAN Card
- Aadhaar Card
- Passport-size photo
- Address proof
- Initial deposit (minimum ₹500)
- Online Option:
- Most banks offer online PPF account opening via net banking or mobile apps.
- Deposit Flexibility:
- Minimum ₹500/year to keep the account active.
- Maximum ₹1,50,000/year.
see also: Post Office Scheme: Earn Just ₹5,000 and 8 Lakhs Every Month!
Tax Savings by Investing in PPF FAQs
1. Can I extend my PPF after 15 years?
Yes, you can extend it in blocks of 5 years indefinitely, with or without fresh contributions.
2. Is PPF safe from market fluctuations?
Absolutely. PPF is a government-backed, risk-free product, unaffected by stock market ups and downs.
3. Can NRIs invest in PPF?
No, Non-Resident Indians (NRIs) are not allowed to open new PPF accounts.
4. Can I take a loan against my PPF balance?
Yes, loans can be taken between the 3rd and 6th financial year, up to 25% of the balance.
5. Is premature closure allowed?
Only after 5 years, under specific conditions like medical emergencies or higher education needs.
