What changed for PPF in the budget

For Indian savers, the Public Provident Fund (PPF) has always been a go-to option for safe, long-term, tax-efficient investing. The Union Budget 2025 has introduced updates to the PPF scheme that enhance its flexibility while retaining its core strengths. If you're planning for retirement or building a long-term savings corpus, here’s everything you need to know about the new rules—and how they impact your financial journey.

The Public Provident Fund is a government-backed savings scheme with a 15-year lock-in period. It earns compounded interest annually and offers triple tax exemption (EEE):

• Exempt at investment stage: Contributions (up to Rs. 1.5 lakh annually) qualify for tax deduction under Section 80C.
• Exempt on interest: The interest accrued is completely tax-free.
• Exempt on maturity: The entire maturity amount (principal + interest) is non-taxable.

This makes PPF ideal for risk-averse investors looking for stability, tax benefits, and long-term corpus building.

Looking for a tax-efficient investment with assured returns? 

While PPF offers tax benefits, a Bajaj Finance Fixed Deposit can give you better returns and flexible tenures. Check FD Rates.

One of the most attractive features of PPF is its Exempt-Exempt-Exempt (EEE) tax status. This means:

1. Deposits are tax-deductible: You can claim tax deductions of up to Rs. 1.50 lakh per financial year under Section 80C.
2. Interest earned is tax-free: Unlike other savings instruments, the interest on PPF is entirely exempt from taxation.
3. Maturity proceeds are tax-free: The total amount (principal + interest) received at the end of the tenure is not subject to any tax.

These tax benefits make PPF an excellent tool for tax-saving financial planning.

1. Higher Annual Investment Limit

The maximum deposit limit has been increased from Rs. 1.5 lakh to Rs. 2 lakh per year. This means you can now contribute more toward building a long-term, tax-free corpus.

2. No Change in Interest Rate

The PPF interest rate continues to hold steady at 7.1% p.a., compounded annually. While it’s safe, this rate is lower than what many fixed deposits are offering today.

Want better returns than PPF’s 7.1%? 

Open a Fixed Deposit with Bajaj Finance and earn up to 7.30% p.a. with flexible payout options. Open FD Account.

3. Faster Access to Partial Withdrawals

Earlier, partial withdrawals from your PPF account were permitted after 5 years. Budget 2025 has now reduced this to 4 years, offering more liquidity without breaking the long-term savings plan.

Should you stick to PPF or diversify?

While the Budget updates make PPF slightly more appealing, it still comes with a long lock-in period and limited return potential. Here's a balanced approach:

• For tax-saving: Use PPF to exhaust your Section 80C benefits.
• For higher returns & liquidity: Add Fixed Deposits to your portfolio for better interest and short-to-medium-term goals.
• For goal-based planning: Diversify using mutual funds, FDs, and PPF to match your life-stage goals.

Don’t let long lock-in periods limit your plans. With Bajaj Finance FDs, choose tenures from 12 to 60 months—designed around your needs. Check Eligibility.

A Quick Comparison: PPF vs Fixed Deposit

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The tweaks made to PPF in Budget 2025—such as the higher deposit ceiling and earlier partial withdrawals—are definitely welcome. But if you’re eyeing higher returns or more flexible access to your money, relying solely on PPF may limit your financial agility.

To build a stable yet growth-oriented portfolio, combine the safety of PPF with the return potential of Fixed Deposits. The key is to balance risk, returns, and access.

Make your money work smarter with high-interest Fixed Deposits. Safe, stable, and tailored for your goals. Check FD Rates offered by Bajaj Finance and start investing now!