PPF

PPF, the Public Provident Fund, is a long-term savings scheme backed by the government. You can put in ₹500 to ₹1.5 lakh a year, it earns a government-set interest rate reviewed every quarter, and the deposits, interest and maturity are all tax-free. The catch is a 15-year lock-in, so it suits long-term goals, not money you may need soon.

How it works

You open a PPF account at a bank or post office and add money any time during the year, up to the ₹1.5 lakh cap, in one go or in parts. Interest is calculated monthly and credited yearly, and because it compounds untouched for 15 years, a steady contribution grows into a large, tax-free sum. See how its rate sits against other safe options in the small savings rates chart.

The triple tax benefit

PPF is one of the few schemes where the money is tax-free at all three stages: your deposit qualifies under section 80C in the old regime, the interest is tax-free, and so is the final maturity amount. That combination is what makes it so effective for long-term, low-risk saving.

The lock-in, and the flexibility within it

The 15-year lock-in is real, but not absolute. You can take a partial withdrawal from the seventh year, borrow against the balance in the early years, and at maturity either close the account or extend it in five-year blocks. PPF sits alongside EPF, which is only for the salaried; PPF is open to anyone. Compare the two in PPF vs EPF.