Pros and Cons of PPF in India

Housing Finance

Looking for an ideal way to accumulate long-term savings? Want a steady return, regular and highly safe long-term investment option? Interest Calculator India PPF will assist you in calculating investment returns. It is very flexible, with a lock-in of 15 years. They have tax benefits. It has a higher rate of interest.

What is PPF?

The Public Provident Fund (PPF) account is one of the most popular ways to save and invest for the long term because it is stable, makes money, and helps you save money on taxes.

In 1968, the National Savings Institute, under the Ministry of Finance, began offering the PPF to people. Since then, it has become an instrument for generating income for investors.

PPF is used by savers as a means of getting income. An individual saver is likely to favor PPF due to its best interest rates and tax treatment.

It’s no surprise that the PPF is so well-liked among investors: it’s among the most secure investment options available. Your money in the fund is protected by the Indian government.

PPF beats out many other investment options due to the government-set interest rate that is updated quarterly. PPF returns are not taxable, and neither are your initial contributions if you make them under Section 80C of the Income Tax Act (ITA). One should learn the ins and outs of the Public Provident Fund (PPF) before putting money into it.

Pros of PPF

The most secure route for investing

The fact that the government is behind a public provident fund is its biggest perk. That’s good news because it implies your principal is safe and won’t be at risk of depreciation. Your initial outlay could be less secure in alternative asset classes like stocks. Long-term investments have a lower risk of loss, but many investors still seek a risk-free, government-backed alternative.

Guaranteed PPF return

Rates of interest are adjusted quarterly, and the current rate is readily available to everyone. Knowing that your money is secure and earning a guaranteed interest rate can be very reassuring and allow you to get a good night’s rest. Not only that but the returns are compounded annually.

Tax benefits

When it comes to taxation, the Personal Pension Fund (PPF) is an EEE investment (exempt, exempt, exempt). Investments of up to Rs. 1.5 lakh per year are eligible for tax breaks under Section 80C of the Income Tax Act. Neither the principal nor the interest will be taxed when the bond is redeemed.

Investment choices in the PPF

Set up a recurring transfer from your savings to your public provident fund account. Doing so will make it easy for you to invest regularly without having to make any major moves as the fiscal year winds down. In addition, you can invest as little or as much as you like by using the lump sum option.

Government protection

This investment option is the safest possible because it is backed by the government.


Provides some leeway. An initial investment of 500 Indian rupees (Rs.) is possible. You can pay the investment all at once or in installments.

Minor benefits

Under the supervision of an adult, a juvenile can open one in his or her name. Under certain circumstances, you may withdraw a portion of your PPF savings.

Extend maturity benefit

Improve the longevity bonus. When the initial fifteen years are up, account holders can add an additional five years. As long as they are happy doing so, it is fine with us.

Cons of PPF

The level of accumulated corpus may not be very high

While the PPF has a guaranteed interest rate, the accumulated corpus may be lower than it would be with an equity investment or savings plan such as the Equity Linked Savings Plan. Equity mutual funds have historically outperformed other asset classes. If you are comfortable with uncertainty and would like a larger nest egg, equity mutual funds are a good bet.

High lock-in period

The 15-year commitment period for a provident fund is significantly longer than that of other investment vehicles. Therefore, it is not as liquid as mutual funds or other investment options that do not have a lock-in period. In addition, the lock-in period for an equity-linked savings scheme (ELSS), a tax-saving mutual fund, is the shortest at only three years.

Upper limit

A maximum of Rs. 1.5 lakh can be contributed to a PPF account annually. Beyond that threshold, your investment will not produce a return. Alternative investment strategies are not capped.

Minimal tax benefit

Annual minimum deposits are subject to a cap. The annual rate is $30,000 (or 1.5). .A deposit of more than Rs. 1.5 lakhs will be taxed.

Poor rate of return

Its rate of return is lower than that of other options like the National Pension System (NPS), mutual funds, etc. For a specified duration, the interest rate on the offer will not change. Inflation is a significant threat since it can quickly eat away at its value.


The goal of this article is to look at the Interest Calculator India PPF in detail. Whether an investment is the best choice for you or not should be determined carefully by yourself. Before investing, it is also important to be aware of the pros and cons of PPF in India. Investment Reliable does not offer financial advice, but we do provide unbiased information and evaluations on trading, investing, and finance. Users ought to always carry out their own research. Also, Piramal Finance has more in-depth, educational, and financial articles.