Public Provident Fund has a fixed 15-year lock-in and a government-set interest rate, compounded annually on the yearly closing balance.
The Public Provident Fund is a government-backed savings scheme with a fixed 15-year lock-in, offering a government-set interest rate (revised quarterly) compounded annually on the account's yearly closing balance. You can contribute up to ₹1,50,000 per year, and the account can be extended in 5-year blocks after the initial 15 years.
PPF's biggest advantage is its EEE (Exempt-Exempt-Exempt) tax status — your contribution, the interest earned, and the maturity amount are all completely tax-free, making the effective post-tax return often more attractive than it first appears compared to taxable options like FDs.
Partial withdrawal is allowed from the 7th financial year onward, subject to limits. Full withdrawal is only available at maturity (15 years) or through account closure under specific conditions (medical emergency, higher education).
You can either withdraw the full amount, or extend the account in blocks of 5 years, with or without making further contributions.
The government revises the PPF rate quarterly based on prevailing government bond yields, so it's not a rate you can lock in for the full 15 years — it moves periodically.