How PPF interest is calculated
The Public Provident Fund (PPF) is a 15-year government savings scheme with tax-free returns. The interest rate is set every quarter by the Ministry of Finance. It is 7.1% a year for October–December 2026, unchanged since April 2020.
- Monthly calculation, yearly credit: interest is worked out each month on the lowest balance between the 5th and the last day of the month, then added to your account once a year on 31 March. It therefore compounds yearly.
- Deposit by the 5th: money deposited after the 5th earns no interest for that month. A yearly deposit made by 5 April earns interest for the whole year, which is the best timing.
- Limits: at least ₹500 and at most ₹1,50,000 per financial year, in one go or in instalments.
Maturity (yearly deposit by 5 April) = P × [(1 + r)n − 1] ÷ r × (1 + r)
For example, ₹1,50,000 every year for 15 years at 7.1% grows to about ₹40.68 lakh: ₹22.5 lakh deposited plus ₹18.18 lakh tax-free interest.
PPF rules at a glance
| Rule | Detail |
|---|---|
| Who can open | Any resident Indian, including one account for a minor. Only one PPF account per person. NRIs cannot open a new account. |
| Term | 15 full financial years after the year of opening. After that you can extend in blocks of 5 years, with or without further deposits. |
| Tax | EEE: deposits qualify for Section 80C (old regime, up to ₹1.5 lakh), and interest and maturity are tax-free. |
| 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 preceding year, or of the preceding year, whichever is lower. |
| Premature closure | After 5 years, only for serious illness, higher education or a change of residency, with a 1% interest penalty. |
| Missed deposit | The account becomes inactive. Revive it by paying ₹50 a year as a fee plus the minimum ₹500 for each missed year. |
Frequently asked questions
What is the PPF interest rate for 2026?
7.1% a year, compounded yearly, for the October–December 2026 quarter. The government reviews it every quarter, and it has been unchanged since April 2020.
How much will I get if I invest ₹1.5 lakh in PPF every year?
About ₹40.68 lakh after 15 years at 7.1%, if you deposit by 5 April each year. Extending for another 5 years with the same deposits takes it to about ₹66.58 lakh.
Is it better to deposit monthly or yearly in PPF?
A single deposit by 5 April earns the most because the whole amount earns interest for 12 months. Monthly deposits made by the 5th earn slightly less. The calculator shows the difference.
Is PPF maturity taxable?
No. PPF is EEE: the deposit gets the 80C deduction under the old regime, and both the interest and the maturity amount are fully tax-free.
What happens after 15 years?
You can withdraw everything, extend for 5 years with deposits (submit Form H within a year of maturity), or let it keep earning interest without deposits. Extensions can be repeated in blocks of 5 years.