Public Provident Fund basics
PPF is a government-backed long-term savings scheme with a 15-year term, a sovereign guarantee and EEE tax status — the deposit qualifies under Section 80C, and both the interest and the maturity amount are completely tax-free. The interest rate (currently 7.1% per annum) is notified every quarter by the Ministry of Finance. You can deposit between ₹500 and ₹1,50,000 per financial year, in lump sum or instalments.
How PPF interest is calculated
Interest is computed monthly on the lowest balance between the 5th and the last day of the month and credited once a year on 31 March. Depositing before the 5th of April therefore earns a full year's interest on that year's deposit. The maturity value for a fixed yearly deposit D before 5 April is M = D × [((1 + r)n − 1) ÷ r] × (1 + r).
Worked example
₹1,50,000 every year before 5 April for 15 years at 7.1%: total deposited ₹22,50,000; maturity about ₹40,68,000; tax-free interest ₹18.18 lakh. Continuing deposits for one 5-year extension (20 years) grows the corpus to about ₹66.6 lakh, and for two extensions (25 years) to about ₹1.03 crore — illustrating why PPF is often held for a full working life.
Extension after maturity
- Extend in blocks of 5 years, with or without fresh deposits, any number of times.
- With deposits: submit Form H within one year of maturity; one withdrawal per year up to 60% of the balance at the start of the block.
- Without deposits: balance keeps earning interest; any amount can be withdrawn once a year.
Loan and partial withdrawal
- Loan: from the 3rd to the 6th financial year, up to 25% of the balance at the end of the second preceding year, at 1% interest, repayable in 36 months.
- Partial withdrawal: from the 7th year, up to 50% of the balance at the end of the 4th preceding year or the preceding year, whichever is lower.
- Premature closure after 5 years for medical treatment, higher education or change of residency status, with a 1% rate reduction.
Who should invest
PPF suits conservative investors, self-employed people without EPF, parents saving for children (minor accounts are allowed within the ₹1.5 lakh family limit) and anyone in the 30% bracket under the old regime, where the effective pre-tax equivalent return of 7.1% tax-free exceeds 10%.
Frequently Asked Questions
What is the current PPF interest rate?
7.1% per annum, compounded yearly, notified quarterly by the government. Change the rate in the calculator if it is revised.
When should I deposit in PPF to get maximum interest?
Before the 5th of the month, ideally the full amount before 5 April, because interest is on the lowest balance between the 5th and month-end.
Can I withdraw PPF before 15 years?
Partial withdrawal is allowed from the 7th year; premature closure after 5 years only for specified reasons with a 1% penalty on the rate.
Is PPF interest taxable?
No. PPF is EEE: deposit deductible under 80C (old regime), interest exempt, maturity exempt. It also enjoys protection from court attachment.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.