HomeInvestmentPros and Cons of PPF in India: PPF Account

Pros and Cons of PPF in India: PPF Account

The Public Provident Fund is one of the most accredited long-term investment options. By investing in this option individuals not only get better returns but also save tax. It is a tax-saving scheme that offers tax redemption under the income tax section 80c.

There are so many investment options out there in the market. But, PPF is one of the risk-free and better ROI investments.

As I am not biased, In this blog I am going to share the benefits of a PPF account and the downside of the PPF account.

So, let’s get started.

Pros of PPF (Public Provident Fund) Account

  • The main objective of the option is to enable individuals to save tax and increase the assets Column to achieve financial freedom.
  • Since these investment options are backed by the central government, there is no chance of losing money.
  • One of the major benefits of a PPF account is that it is risk-free. A novice investor who doesn’t know about investment, can easily open a PPF account, deposit money, and withdraw it.
  • The interest of the PPF account is a crown of this scheme. An 8% interest rate will be paid at the end of the financial year, which is much higher than other government investment schemes.
  • With Rs. 500 you can open a PPF account. In the event, if you want to modify your investment you can do it.
  • Since the maturity of this period is 15 years, it is very beneficial for the investors. For instance, if somebody opens a PPF account at the age of 20 after 15 he will be 35, he will be financially free at the age of 35. This is the power of investing at an early age.
  • One of the greatest benefits of a PPF account is that you can take a loan against this investment.

For more understanding regarding finance and investment, you can read more blogs on personal finance and get a good understanding of PPF accounts.

Cons of PPF (Public Provident Fund) Account

  • This investment scheme is not for individuals who invest in short-term investment options.
  • This investment scheme is for individuals who are looking to spend jointly. Joint accounts are not allowed.
  • The maximum limit to invest in this scheme is 1.5 Lakhs. So, if you are willing to spend more on the investment scheme, PPF is not for you.
  • There is no liquidity.
  • In case of emergency, you can withdraw the amount only after 5 years by paying some penalty.

Know about PPF Account and Withdrawal Rules

The Public Provident Fund is one of the most popular long-term investment options. If you want to keep your money in a safe investment plan for the long term then this plan is a true buy. You can open a PPF account in any city in India, but you must be a citizen of India. Since the PPF investment plan is backed by the government. There are so many valuable reasons to invest in PPF, but interest is the most important. The interest rate of PPF is 8% hence the return you will get is also good.

Before investing in PPF, you should know the PPF account rules. In this finance wiki blog, I am going to share with you PPF account rules, withdrawal, and deposit rules respectively. So, let’s get started.

1. PPF Account Rules

  • Individuals who are residents of India are eligible to open PPF accounts.
  • The only investor has a right to maintain the PPF account, on his behalf no one can use it.
  • Non-Indian Residents are not allowed to open PPF accounts.
  • Hindu Undivided families are not eligible to open a PPF account.
  • Each person is eligible for an opening to open a PPF account only.
  • A minimum early deposit is Rs 500 and a maximum is Rs. 1,5 lakhs.
  • The entire amount is withdrawn at the time of the maturity period.
  • A PPF account holder has the right to transfer his account from one branch to another branch.

2. PPF Withdrawal Rules

  • PPF account holders are eligible for partially withdrawing money after the 3rd and 6th fly of the opening account.
  • PPF account holders are eligible to take a loan against an investment amount but repay within thirty-six months.
  • At the time of the maturity period, you can extend the account. If you don’t withdraw money during the maturity period your account will be extended by default.
  • If you want to withdraw partially then it will be made from the 5th financial year.
  • There will be no tax on partial withdrawal.
  • A premature closure account facility is available after 5 years if a PPF account holder needs money for the treatment of serious ailments/ children’s education. A penalty of 1% is subject to apply at the time of premature closure account.

3. Deposit Rules

  • Individuals can invest in the PPF account with a minimum of Rs. 500 and a maximum of Rs. 1.5 Lakhs per financial year.
  • A deposition is tax-deductible under section 8OC.
  • The interest rate of the PPF account is 8% respectively.
  • Individuals can deposit money in lump sum amounts.


It is vital to open a PPF account if you are seeking a safe and long-term investment. For more details, you check the best investment blogs. The PPF has its pros and cons. However, it is an ideal investment option for individuals who have a low-risk appetite and low investment knowledge.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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