₹1.5 lakh per year, 15-year lock-in, sovereign credit, EEE taxation. The bedrock of every Indian retirement.
End-of-year interest credit assumed. Real PPF accrues interest monthly on the minimum balance between the 5th and the last of the month. Deposit before the 5th of the month to earn interest for that month.
EEE taxation: Exempt at investment (Sec 80C), exempt during accrual (interest), exempt at maturity. One of the last EEE instruments in India.
Lock-in + liquidity: 15 years mandatory. Partial withdrawal from year 7 (capped to 50% of balance at end of year 4). Loan against PPF available from year 3 to 6.
Rate risk: the 7.1% is set quarterly by Min. of Finance and has been steadily declining (it was 12% in the 1990s). The projection assumes a constant rate — be conservative.
Further reading: NPS vs PPF — which one belongs in your stack.
Sources: PPF Scheme 1968 (amended 2019), Ministry of Finance interest rate notifications, Income Tax Act Sec 80C.
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