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PPF Explained: Interest Rate, Rules and How Much You'll Get
Quick Work Studio · 2026-10-27
The Public Provident Fund (PPF) is a government savings scheme you can open at a post office or most banks. It pays a fixed rate set by the government, the money is safe, and the interest is tax-free. The catch is that it's a 15-year commitment.
The current interest rate
PPF pays 7.1% a year for October to December 2026. The government reviews small savings rates every quarter, but the PPF rate has stayed at 7.1% for several years. Interest is added to your account once a year, on 31 March.
The basic rules
| Rule | Detail |
|---|---|
| Deposit | At least ₹500 and at most ₹1.5 lakh in a financial year |
| Term | 15 full financial years after the year you open it |
| Extension | In blocks of 5 years, with or without new deposits |
| Accounts | One per person (plus one for a minor child as guardian) |
| Tax | Interest and maturity amount are tax-free; deposits count towards the ₹1.5 lakh deduction in the old regime |
The 5th-of-the-month rule
Interest for each month is calculated on the lowest balance between the 5th and the end of that month. Money deposited on the 6th earns nothing for that month. So:
- If you invest once a year, deposit before 5 April to earn interest for the whole year.
- If you invest monthly, deposit by the 5th of each month.
Over 15 years, depositing on 4 April instead of in March can add tens of thousands of rupees.
How much will you get?
Maturity values at 7.1%, depositing at the start of each year:
| Yearly deposit | 15 years | 20 years | 25 years |
|---|---|---|---|
| ₹12,000 (₹1,000 a month) | ₹3.25 lakh | ₹5.33 lakh | ₹8.25 lakh |
| ₹50,000 | ₹13.56 lakh | ₹22.19 lakh | ₹34.36 lakh |
| ₹1,50,000 | ₹40.68 lakh | ₹66.58 lakh | ₹1.03 crore |
Look at the jump after 15 years: extending the account is where compounding really pays off. The rate can change, so treat these as estimates.
Taking money out before 15 years
- Loan: from the 3rd to the end of the 6th financial year, you can borrow against your balance.
- Partial withdrawal: from the 7th financial year, you can take out part of the balance once a year.
- Early closure: after 5 years, only for reasons like serious illness or higher education, with a small interest penalty.
If you miss a year's deposit
The account becomes inactive. To restart it, pay the minimum ₹500 for each missed year plus a ₹50 fee per year. Set a reminder to put in at least ₹500 every year.
PPF compared with FD and EPF
- Fixed deposit: more flexible, but the interest is taxed at your slab rate.
- EPF: higher rate (8.25% for 2025-26) but only for salaried people, through your employer. See our EPF guide.
- PPF suits long-term, safe goals like a child's education or extra retirement savings, especially for self-employed people without EPF.
Try it: the PPF Calculator shows your yearly balance, interest and maturity amount, including extensions. Compare with the FD Calculator or plan bigger goals with the Retirement Calculator.