Public Provident Fund: Under which section is PPF interest exempted from income tax?

The Public Provident Fund (PPF) is a popular long-term savings scheme backed by the Government of India. It encourages individuals to save money while earning a decent interest rate with safety and income tax benefits.

While there is no strict deadline for depositing money into a PPF account, you can maximize your returns by contributing between April 1st and April 5th of a financial year. If a single annual contribution is not feasible, ensure your monthly deposits are made before the 5th of each month to earn the maximum interest benefit.

Key income tax benefits of PPF

Contributions made to PPF are eligible for deduction under Section 80C of the Income Tax Act. You can claim a deduction of up to ₹1.5 lakh per financial year.

Deduction for contribution to PPF is not available under the new tax regime.

The interest earned on your PPF balance is completely exempt from tax under Section 10(11). This means you do not pay tax on the interest accrued each year.

When your PPF account matures (after 15 years), the entire maturity amount (principal + interest) is fully exempt from tax.

The Public Provident Fund (PPF) offers an EEE (Exempt-Exempt-Exempt) tax status, making it one of the most tax-efficient investment options in India.

This means that the amount you invest in PPF is eligible for a deduction under Section 80C of the Income Tax Act, allowing you to reduce your taxable income by up to ₹1.5 lakh per financial year.

Additionally, the interest earned on the PPF balance is completely tax-free under Section 10(11), so you don’t have to pay any tax on the returns accrued annually.

Finally, when the account matures after 15 years, the entire maturity amount, including both principal and interest, is also exempt from tax, offering full tax protection across all stages of the investment.