The Public Provident Fund (PPF) is a government-backed savings scheme with a 15-year lock-in and tax-free returns. It currently earns 7.1% a year (October–December 2026 quarter). It suits safe, long-term goals like retirement or a child’s education.
Key rules at a glance
| Feature | Rule |
|---|---|
| Interest | 7.1% a year, compounded yearly; reviewed every quarter |
| Deposit | Minimum ₹500, maximum ₹1.5 lakh a financial year |
| Lock-in | 15 full financial years after the year of opening |
| Accounts | One per person (plus one for a minor child as guardian) |
| Where to open | Post office or most banks |
| Tax | Deposits deductible under the old regime; interest and maturity tax-free |
How much can PPF grow?
₹1.5 lakh deposited every year for 15 years at 7.1% grows to about ₹40.68 lakh, of which about ₹18.18 lakh is interest. Rates can change each quarter, so treat this as an estimate. Run your own numbers in the PPF calculator.
Tip: interest is calculated on the lowest balance between the 5th and the last day of each month. Deposit before the 5th – ideally the full amount before 5 April – to earn interest for the whole year.
Getting money out early
- Loan: from the 3rd to the 6th year, up to 25% of the balance at the end of the second year before the loan.
- Partial withdrawal: once a year from the 7th year, up to 50% of the balance at the end of the 4th year before, or of the previous year, whichever is lower.
- Premature closure: after 5 years, only for serious illness, higher education or a change of residence abroad, with 1% less interest.
At maturity
- Withdraw the whole balance tax-free, or
- Extend in blocks of 5 years, with or without new deposits. Apply within one year of maturity to keep depositing.
Tax position
PPF is “exempt-exempt-exempt”: deposits count towards the ₹1.5 lakh limit of Section 123 (old Section 80C) under the old regime, and interest and maturity are tax-free under both regimes. See the full Section 123 list.
PPF or something else?
PPF is safe but locks money for long. For goals under 5 years, compare an FD with the FD calculator; for long-term growth with higher risk, see SIP vs lumpsum.
Good to know
- If you miss the ₹500 minimum in a year, the account becomes inactive. Revive it by paying ₹50 penalty plus ₹500 for each missed year.
- NRIs cannot open a new PPF account; an account opened while resident can continue until maturity.
- The government sets the rate every quarter – check the post office or your bank for the current figure.
Frequently asked questions
What is the PPF interest rate now?
7.1% a year for the October–December 2026 quarter. The government reviews it every quarter.
How much can I deposit in PPF?
Between ₹500 and ₹1.5 lakh in a financial year.
Can I withdraw from PPF before 15 years?
Partial withdrawals are allowed once a year from the 7th year, and loans from the 3rd to the 6th year. Premature closure is allowed after 5 years only for specific reasons.