For example - You invest Rs 10,000 every year in PPF. After 15 years, you receive a lumpsum of approximately Rs 215,000 (Invested amount + interest). Every year, you are eligible for a deduction of Rs 10,000 from your income and thus save tax on it. When you withdraw the amount only the deposit of Rs 150,000 (Rs 10,000 x 15 years), will be taxable out of the total amount. Interest part is not taxable.