What is PPF? Benefits, Interest Rate & How to
Everything you need to know about the Public Provident Fund — interest rate for 2026, tax benefits, contribution limits, and strategies to maximise.
The Public Provident Fund (PPF) is one of India's most trusted long-term savings instruments — government-backed, tax-free, and currently offering 7.1% per annum for Q1 2026. Here is everything you need to know.
PPF at a Glance
- Interest rate: 7.1% per annum (compounded annually, Q1 FY2026-27)
- Tenure: 15 years (extendable in 5-year blocks)
- Minimum deposit: ₹500 per year
- Maximum deposit: ₹1,50,000 per year
- Tax status: EEE — Exempt on contribution, Exempt on interest, Exempt on maturity
Tax Benefits
PPF contributions up to ₹1,50,000 per year qualify for deduction under Section 80C. The interest earned is completely tax-free, and the maturity amount is also fully exempt from tax. This triple-exemption (EEE) status makes PPF uniquely tax-efficient.
How Much Will ₹1.5 Lakh/Year Grow to?
If you invest the maximum ₹1,50,000 every year for 15 years at 7.1%:
- Total deposits: ₹22,50,000
- Interest earned: ≈ ₹18,18,000
- Maturity value: ≈ ₹40,68,000
Extend for another 5 years and the maturity value grows to approximately ₹66–70 lakhs.
The Timing Trick: Deposit Before the 5th
PPF interest is calculated on the minimum balance between the 5th and the last day of each month. If you deposit before the 5th of each month, you earn interest on the new deposit for that month. Depositing on the 6th or later means you miss a full month's interest.
Loan Against PPF
You can take a loan against your PPF balance from the 3rd to 6th financial year. The loan amount can be up to 25% of the balance at the end of the 2nd preceding year. Interest is charged at 1% above the PPF rate — currently 8.1%.
Partial Withdrawal
Partial withdrawals are allowed from the 7th year onward. You can withdraw up to 50% of the balance at the end of the 4th preceding year (or the year immediately preceding the withdrawal, whichever is lower).
PPF vs FD vs ELSS for 80C
| Instrument | Return | Lock-in | Tax on Maturity |
|---|---|---|---|
| PPF | 7.1% (tax-free) | 15 years | Exempt |
| Tax-saving FD | 6.5–7.5% | 5 years | Taxable |
| ELSS (mutual fund) | 12–15% (market) | 3 years | 10% LTCG above ₹1.25L |
Calculate your PPF corpus with our PPF Calculator.