What is PPF?
Public Provident Fund (PPF) is a 15-year long-term savings scheme backed by the Government of India. It's one of the most popular instruments for conservative Indian savers because of the combination of government guarantee, reasonable tax-free return, and triple-E tax treatment.
PPF interest rate
Public Provident Fund (PPF), current rate
7.1% p.a.
Applies to deposits for 1 July 2026 to 30 September 2026 (Q2 FY 2026-27).
Compounded annually and added to your balance — nothing is paid out until you withdraw.
The Ministry of Finance reviews small savings rates every quarter and notifies them shortly before the quarter begins. A rate change applies to new deposits; SCSS, NSC, KVP and Post Office time deposits keep the rate fixed for the whole term once you have invested, while PPF and SSY balances earn whatever the current rate is each year.
Source: Ministry of Finance, quarterly small savings notification (Q2 FY 2026-27). Verified 2026-08-13.
PPF works differently from a fixed deposit here. Your balance does not lock in the rate you opened the account at — it earns whatever the current quarter's rate is, for the whole 15 years. A revision changes what your existing balance earns, not just new deposits.
Interest is calculated on the lowest balance between the 5th and the last day of each month, then credited once a year on 31 March. This is why the timing of your deposit matters: money paid in on the 4th earns for that month, money paid in on the 6th does not.
PPF eligibility, deposits and lock-in
- Lock-in: 15 years from account opening (extensions in 5-year blocks; partial withdrawal allowed from year 7).
- Deposits: ₹500 minimum, ₹1.5 lakh maximum per financial year. Anything above ₹1.5 L is rejected.
- Tax treatment: EEE – contribution deductible under Section 80C, interest is tax-free, maturity is tax-free.
- Eligibility: Any resident Indian adult. You can also open a PPF on behalf of a minor child (separate from SSY).
- Opening: Any authorised bank (SBI, HDFC, ICICI, Axis, etc.) or post office.
How the calculator works
PPF interest compounds annually on the closing balance.
For each year:
balance = (balance + yearly_deposit) × (1 + rate)
At ₹1.5 L/year deposit and 7.1% interest:
| Horizon | Total invested | Maturity value |
|---|---|---|
| 10 years | ₹15 L | ~₹22 L |
| 15 years | ₹22.5 L | ~₹40.7 L |
| 20 years | ₹30 L | ~₹66.6 L |
| 25 years | ₹37.5 L | ~₹1.03 Cr |
PPF's tax-free nature is worth 20–30% more than the nominal rate suggests, depending on your tax bracket.
PPF vs PPF-equivalent alternatives
| Instrument | Return | Tax | Lock-in | Risk |
|---|---|---|---|---|
| PPF | 7.1% | Tax-free | 15 yrs | Sovereign guarantee |
| SSY (girl child only) | 8.2% | Tax-free | 21 yrs | Sovereign guarantee |
| EPF | 8.25% | Tax-free | Until retirement | Sovereign guarantee |
| ELSS (equity-linked) | ~11–13% historical | 12.5% LTCG | 3 yrs | Market |
| Equity mutual fund | ~11–13% historical | 12.5% LTCG | Flexible | Market |
PPF is the bedrock of the "guaranteed tax-free" bucket of an Indian household's portfolio. Most NYVO clients combine PPF + equity MFs – PPF for the guaranteed slice of long-term goals, equity for the growth slice.
How to open a PPF account
- Walk into any authorised bank or post office with Aadhaar, PAN, and a passport-size photo.
- Fill Form A (single-name PPF opening) or Form A1 (for minor accounts). Online opening is available at most banks.
- Initial deposit of ₹500 or more.
- You'll receive a passbook with the account number and a starter amount balance.
After opening, top up anytime via net banking, UPI (some banks), or branch cash – up to the ₹1.5 L annual cap.
Tax math
Section 80C: Your yearly PPF deposit is deductible under Section 80C (combined limit ₹1.5 L with EPF, ELSS, tuition, insurance premium, home loan principal, etc.). If your 80C is already full from EPF + home loan principal, the PPF deduction benefit is zero – you're depositing "post-tax" rupees.
Interest & maturity: Both tax-free. This is PPF's key advantage over FDs (slab-rate taxed) and debt mutual funds (also slab-rate post-April 2023).
Common mistakes
- Depositing more than ₹1.5 L. Excess is rejected but can delay the current year's interest credit. Stay within the cap.
- Treating PPF as a savings account. Partial withdrawal is allowed only from year 7 onwards, and with restrictions. Don't park emergency money in PPF.
- Ignoring the 5-year extension option. After 15 years, you can extend in 5-year blocks (with or without fresh deposits) – interest continues compounding. Many investors close unnecessarily at 15 years.
- Maxing 80C on PPF alone when ELSS would do better. ELSS has a 3-year lock-in and equity-linked returns that are not guaranteed, against PPF's guaranteed 7.1%. The trade is certainty for the chance of more, and which side of it suits you depends on how long the money has to sit.