Mera Hisab
What is PPF?
The Public Provident Fund (PPF) is a government savings scheme for the long term. You can open an account at a post office or a bank, deposit between ₹500 and ₹1.5 lakh in each financial year, and it matures after 15 years. The interest rate is set by the Government of India every quarter; it is 7.1% a year for July–September 2026, the same as for the previous several quarters.
PPF is one of the few investments that is tax-free at all three stages: the deposit can be claimed as a deduction under the old tax regime (section 123 of the Income-tax Act, 2025; earlier section 80C), and the interest and the maturity amount are both tax-free.
How PPF interest is calculated
- Interest is worked out every month on the lowest balance between the 5th and the last day of the month.
- It is added to your account once a year, on 31 March, so it compounds yearly.
- A deposit made by the 5th earns interest for that month; a deposit on the 6th or later earns nothing for that month.
This is why depositing the full year's amount before 5 April earns the most.
Examples at 7.1%
| Yearly deposit | Total deposited in 15 years | Maturity amount | Interest earned |
|---|---|---|---|
| ₹12,000 | ₹1,80,000 | ₹3,25,457 | ₹1,45,457 |
| ₹50,000 | ₹7,50,000 | ₹13,56,070 | ₹6,06,070 |
| ₹1,00,000 | ₹15,00,000 | ₹27,12,139 | ₹12,12,139 |
| ₹1,50,000 | ₹22,50,000 | ₹40,68,209 | ₹18,18,209 |
Depositing ₹12,500 every month (also ₹1.5 lakh a year) gives ₹39,44,599 after 15 years, about ₹1.24 lakh less than ₹1.5 lakh deposited once before 5 April, because each monthly deposit waits longer to start earning.
Extending after 15 years
At maturity you can take the money, or extend the account in blocks of 5 years, with or without new deposits (to continue deposits, submit the extension form within one year of maturity). With ₹1.5 lakh a year:
| Period | Total deposited | Maturity amount |
|---|---|---|
| 15 years | ₹22,50,000 | ₹40,68,209 |
| 20 years | ₹30,00,000 | ₹66,58,288 |
| 25 years | ₹37,50,000 | ₹1,03,08,015 |
Withdrawals and loans
- Loan: from the 3rd to the 6th financial 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 financial year, up to 50% of the balance at the end of the 4th year before, or of the previous year, whichever is lower.
- Early closure: after 5 years, only for reasons such as serious illness or higher education, with 1% less interest.
These rules are from the PPF Scheme, 2019; check with your post office or bank before you act, as rules can change.
Frequently asked questions
What is the current PPF interest rate?
7.1% a year for July–September 2026. The government reviews it every quarter, so change the rate above if it has been revised.
How much will ₹1.5 lakh a year in PPF give after 15 years?
At 7.1%, ₹1.5 lakh deposited before 5 April every year grows to ₹40,68,209: ₹22.5 lakh deposited and ₹18.18 lakh interest, all tax-free.
Is it better to deposit monthly or once a year?
Once a year before 5 April earns the most. If that is not possible, deposit before the 5th of each month so every deposit earns interest for that month.
Is PPF interest taxable?
No. PPF interest and the maturity amount are fully tax-free. If you use the old tax regime, deposits can be claimed as a deduction of up to ₹1.5 lakh a year (section 123 of the Income-tax Act, 2025, which replaced section 80C).
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