One of the main reasons PPF, or Public Provident Fund, is so popular in India is because its one of the most tax-efficient savings scheme. PPF, as operated by the governed of India, attracts the EEE status of investment.

EEE is a short-form for Exempt, Exempt, Exempt (EEE). Hence, a PPF account is:

Exempt from tax on amount invested,

Exempt from tax or interest or income earned, and

Exempt from tax on total income earned.

Additionally, one can use investment in PPF to lower his/her taxable income as PPF falls under Section 80C investments. Investment, up to Rs.1.5 lakh, made under Section 80C of the Income Tax Act, 1961, can be used to lower an individual’s taxable income, and hence, tax outgo.

Thus, not only are your returns exempt from tax, you can also use your PPF contributions, up to maximum Rs.1.5 lakh, to lower your taxable income.