PPF - Public Provident Fund - Tax-free Saving Tool in India

What is PPF?
A voluntary savings instrument in India to mobilize small savings in India over a period generating tax free interest returns to the person. Thus this provides a mechanism to self-employed professionals to save for retirement needs. The guarantee by the Central Government also adds to the low risk nature of this fund.
Who can Open/ Eligibility?
Only a resident individual can open a PPF account . 

A minor individual can open with the help of a legal guardian

Non-resident Indians are not allowed to open a PPF account. However existing PPF accounts can be continued to be operated if a resident becomes non-resident.( Though such balance cannot be taken out of the country)

Restrictions

 Only one PPF account can be held by any individual .

 Lock-in period

 Original tenure of 15 years. This can be extended by 1 or more blocks of 5 years each.

 Funds cannot be withdrawn during such lock-in period until maturity . However partial withdrawal is allowed in the end of the 6th year .

 Tax Status - EEE(Exempt, Exempt , Exempt)

 Contribution to PPF is exempt under 80C (Max Upto Rs 1,50,000 a year from 2014-15)

 Interest earned is exempt

 Amount withdrawn on maturity is fully exempt.

 The balance in PPF is also exempt from wealth tax.

 Loan Facility
Loan can be taken from 3rd to 5th year. Rate after 1.12.2011 is 2% more than the interest on PPF.(1% for loans upto 30.11.2013).

Maximum of 25 percent of balance at end of the 2nd immediately preceding year would be allowed as loan. Withdrawals must be repaid within 36 months.

Second loan is available between 3rd and 6th year and only if first one is fully repaid. Inactive accounts are not eligible for loan

Minimum Amount
A minimum of Rs 500 must be contributed every year or a penalty of Rs 50 is charged.
Maximum Amount
Rs 150000 in a year (lumpsum or in maximum of 12 installments)
Interest Earned
8.7% p.a as per rates published by the Govt each year. Compounded annually and calculated on the lowest balance between 5th and last day of the month. Interest is credited on 31st March every year.
Guarantee
The amount is fully guaranteed by the Central Government. The balance also cannot be attached by way of any court order except for recovery of tax dues by Income Tax authorities.
Where to Open
The account can be opened at any Post office in India or with certain banks like State Bank of India or ICICI Bank. It is also possible to shift the accounts between various banks free of charge. Certain Private banks have been authorized to operate PPF account as of 2014.
Risk 
Extremely low
Nomination
Can be specified as % share at any point of time. The proceeds will be given to the nominee on death of the account holder.

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