The Public Provident Fund (PPF) is a government-backed savings scheme with a 15-year lock-in that currently pays 7.1% a year, compounded annually. You can deposit between Rs 500 and Rs 1.5 lakh each financial year. Deposits qualify for deduction under the old tax regime, and both interest and maturity amount are tax-free. You can open it at a post office or any authorised bank.
The Public Provident Fund is one of the safest long-term savings options in India. It is backed by the Government of India, the interest is tax-free, and the 15-year lock-in forces discipline. It suits people who want a risk-free part in their portfolio, parents saving for children, and self-employed people who do not have EPF. Here is everything you need to know.
PPF at a glance
| Feature | Details |
|---|---|
| Interest rate | 7.1% a year, compounded annually (July to September 2026 quarter) |
| Minimum deposit | Rs 500 a financial year |
| Maximum deposit | Rs 1.5 lakh a financial year (including a minor’s account in your name) |
| Tenure | 15 full financial years, extendable in blocks of 5 years |
| Where to open | Post office or authorised banks such as SBI, other public sector banks, ICICI, HDFC and Axis |
| Who can open | Resident Indian individuals, including for a minor. One account per person |
| Tax status | Exempt-Exempt-Exempt (EEE) |
How the PPF interest rate is set
The Ministry of Finance reviews small savings interest rates every quarter, broadly linked to government bond yields. PPF has stayed at 7.1% for several years, and rates for the July to September 2026 quarter were kept unchanged. The rate for October to December 2026 is announced before the quarter begins. Interest is calculated every month but credited once a year on 31 March.
The 5th of the month rule
Interest for a month is calculated on the lowest balance between the 5th and the last day of that month. So a deposit made on the 6th earns no interest for that month. If you invest the full Rs 1.5 lakh at once, deposit it between 1 and 5 April to earn interest for the whole year.
A one-time Rs 1.5 lakh deposit every April for 15 years at 7.1% grows to about Rs 40.7 lakh, of which about Rs 18.2 lakh is tax-free interest.
How to open a PPF account
- Visit a post office or a bank branch, or use the net banking of banks that allow online PPF opening.
- Fill in the account opening form and nominate a family member.
- Submit KYC: Aadhaar, PAN, a photograph and address proof.
- Make the first deposit of at least Rs 500.
You can transfer a PPF account between post office and bank, or between banks, without breaking it.
Loans against PPF
You can take a loan from the third financial year to the end of the sixth. The loan can be up to 25% of the balance at the end of the second year before the year of application. Interest is 1% above the PPF rate, and the loan must be repaid within 36 months.
Partial withdrawal
From the seventh financial year (after five full years), you can withdraw once a year. The limit is 50% of the balance at the end of the fourth year before the year of withdrawal, or at the end of the previous year, whichever is lower. Withdrawals are tax-free.
Premature closure
After five years, you can close the account early only for specific reasons: life-threatening illness of you, your spouse, children or parents; higher education of you or your children; or a change in residency status. A penalty of 1% interest is deducted for the period the account ran.
Maturity and extension
At the end of 15 years you can:
- Close the account and take the full amount tax-free.
- Extend it for 5 years without further deposits. The balance keeps earning interest and you can withdraw any amount once a year.
- Extend it for 5 years with deposits, by submitting Form H within one year of maturity. Withdrawals are then limited to 60% of the balance at the start of the extension.
Tax benefits
- Deposits qualify for the Rs 1.5 lakh deduction under the old tax regime (section 80C in the 1961 Act). There is no deduction under the new regime.
- Interest earned is fully tax-free in both regimes.
- The maturity amount is tax-free.
See our income tax slab guide to decide which regime suits you.
PPF compared with other options
| Scheme | Rate (Jul-Sep 2026) | Lock-in | Tax on interest |
|---|---|---|---|
| PPF | 7.1% | 15 years | Tax-free |
| Sukanya Samriddhi Yojana | 8.2% | 21 years (girl child) | Tax-free |
| Senior Citizen Savings Scheme | 8.2% | 5 years | Taxable |
| National Savings Certificate | 7.7% | 5 years | Taxable |
| EPF (salaried) | Set yearly by EPFO | Till retirement | Tax-free within limits |
Saving for a daughter? The Sukanya Samriddhi Yojana pays more. Over 60? Look at the Senior Citizen Savings Scheme.
Common rules to remember
- If you miss the Rs 500 minimum in a year, the account becomes discontinued. Revive it by paying Rs 50 penalty for each missed year plus the minimum deposit.
- NRIs cannot open a new PPF account. An account opened while resident can continue till maturity but cannot be extended.
- Joint accounts are not allowed.
- PPF balance cannot be attached by a court order to pay debts.
Sources
- Public Provident Fund Scheme, 2019, Ministry of Finance notification
- Department of Economic Affairs quarterly notifications on small savings rates
- India Post, Post Office Savings Schemes (indiapost.gov.in)
Last updated: 26 September 2026. Interest rates are revised quarterly.
Frequently asked questions
What is the current PPF interest rate?
7.1% a year, compounded annually, for the July to September 2026 quarter. The government reviews the rate every quarter.
What is the maximum amount I can deposit in PPF?
Rs 1.5 lakh in a financial year, including deposits in a minor's PPF account where you are the guardian. The minimum is Rs 500.
Can I withdraw money from PPF before 15 years?
Yes, partial withdrawals are allowed once a year from the seventh financial year, and premature closure is allowed after five years for specific reasons like serious illness or higher education, with a 1% interest penalty.
Is PPF interest taxable?
No. PPF interest and the maturity amount are fully tax-free. Deposits get a deduction only under the old tax regime.
Can NRIs open a PPF account?
No. NRIs cannot open a new PPF account. An account opened while resident can be continued until maturity.