The Public Provident Fund (PPF) is India's most trusted long-term savings instrument, backed by the Government of India. It offers a sovereign-guaranteed return (currently 7.1% p.a.), complete tax exemption under the EEE (Exempt-Exempt-Exempt) category, and a 15-year lock-in with extension options. PPF is ideal for risk-averse investors building a retirement or children's education corpus.
How Is PPF Interest Calculated?
PPF interest is calculated on the minimum balance between the 5th and last day of each month. Deposits made before the 5th of a month earn interest for that full month — a crucial tip for maximising returns. Interest is compounded annually and credited on March 31 each year. The calculator applies the current 7.1% rate across the full 15-year tenure.
PPF Deposit Rules and Limits
The minimum annual deposit is ₹500 and the maximum is ₹1.5 lakh per financial year. Deposits can be made as a lump sum or in up to 12 instalments per year. Missing the minimum ₹500 deposit in any year causes the account to become dormant — revive it by paying ₹50 penalty per missed year plus the minimum deposit.
PPF Extension After 15 Years
After 15-year maturity, you can extend the PPF account in 5-year blocks. You can extend without deposits (corpus earns interest; withdrawals are allowed) or with deposits (continuing to contribute and earn the full benefit). Extensions must be applied for within 1 year of maturity.
Frequently Asked Questions
Can I withdraw from PPF before 15 years?
Partial withdrawals are allowed from the 7th financial year onwards — up to 50% of the balance at the end of the 4th or preceding year, whichever is lower. Full premature closure after 5 years is permitted only for medical emergencies or higher education, with a 1% interest penalty.
Is PPF interest taxable?
No. PPF is EEE (Exempt-Exempt-Exempt) — contributions qualify for Section 80C deduction, interest earned is tax-free, and maturity proceeds are completely tax-free.
Can NRIs invest in PPF?
NRIs cannot open a new PPF account. If an account was opened as a resident, it can be continued until maturity (15 years) but cannot be extended thereafter.
What is the current PPF interest rate?
The PPF interest rate has been 7.1% per annum since April 2020. The government reviews it every quarter; as of Q1 FY 2025-26 (April–June 2025) the rate remains 7.1% p.a. Always verify the latest notified rate on the Ministry of Finance website before making investment decisions.
Can I take a loan against my PPF account?
Yes. A loan against PPF is available from the 3rd to 6th financial year, up to 25% of the balance at the end of the 2nd preceding year. The loan interest rate is 1% above the PPF interest rate.