Maturity amount · Interest earned · Tax savings · Lock-in timeline · Smart Insights
Disclaimer: PPF interest rate is 7.1% p.a. for Q1 FY 2026-27 (confirmed by Ministry of Finance, 30 Mar 2026). Interest is compounded annually and credited on 31 March. Calculated on lowest balance between 5th and last day of each month. Annual deposit limits: ₹500–₹1,50,000. Tax saving estimates assume old tax regime and 80C deduction. Section 80C benefit not available under new tax regime. Loan available from 3rd–6th year; partial withdrawal after 5 years. Premature closure after 5 years with 1% interest penalty. Results are estimates — consult your bank or tax advisor for exact figures.
The Public Provident Fund (PPF) is a long-term, government-backed savings scheme open to all Indian residents, offering a fixed, government-declared interest rate, a 15-year lock-in, and one of the few investment options in India with completely tax-free returns. It is widely used both as a retirement-style savings tool and as a way to claim deductions under Section 80C of the Income Tax Act.
PPF maturity is calculated using annual compounding, where each year's deposit compounds for its own remaining number of years until maturity:
| Variable | Meaning | How to find it | Example |
|---|---|---|---|
| P | Yearly deposit amount | The amount you plan to deposit each financial year (₹500–₹1,50,000) | ₹1,50,000 |
| r | Annual PPF interest rate (government-declared) | Current quarter's notified rate | 7.1% → 0.071 |
| n | Tenure in years | Base 15 years, extendable in 5-year blocks | 15 years |
| M | Maturity value | Calculated output | ₹40,68,209 (approx.) |
Inputs: P = ₹1,50,000/year | Rate = 7.1% p.a. | Tenure = 15 years
Because PPF compounds annually (not monthly or quarterly like RD/FD), depositing your full yearly contribution early in the financial year — ideally before 5th April — captures a full year of interest on that amount, rather than losing months of compounding by depositing later in the year.
PPF has a mandatory 15-year lock-in from the date of account opening, but it isn't entirely inaccessible during that period — the scheme allows partial liquidity at specific milestones.
Available from the 3rd to the 6th financial year of the account, up to 25% of the balance at the end of the 2nd year preceding the loan request.
Permitted from the 7th financial year onward, up to 50% of the balance at the end of the 4th year preceding the withdrawal year, or the immediately preceding year, whichever is lower.
At the end of 15 years, the entire balance — deposits plus accrued interest — becomes available, completely tax-free.
The account can be extended in blocks of 5 years indefinitely, either with continued contributions or without — letting you keep earning the PPF rate well past the original 15 years.
PPF contributions qualify for deduction under Section 80C of the Income Tax Act, up to a combined limit of ₹1,50,000 per financial year across all Section 80C instruments (PPF, ELSS, EPF, life insurance premiums, principal repayment on home loan, and others).
| Income Tax Slab | Max PPF Deposit | Approx. Tax Saved (80C, Old Regime) |
|---|---|---|
| 5% slab | ₹1,50,000 | ₹7,500 + cess |
| 20% slab | ₹1,50,000 | ₹30,000 + cess |
| 30% slab | ₹1,50,000 | ₹45,000 + cess |
| Instrument | Lock-in | Returns | Taxation on Maturity |
|---|---|---|---|
| PPF | 15 years | Fixed, govt-set (~7–8% historically) | Fully tax-free (EEE) |
| ELSS Mutual Funds | 3 years | Market-linked (historically 10–14%) | LTCG tax above ₹1.25 lakh/yr |
| EPF | Until retirement (with conditions) | Fixed, govt-set (~8% historically) | Tax-free if withdrawn after 5 years' service |
| NSC | 5 years | Fixed, govt-set | Interest taxable, but reinvested interest qualifies for 80C |
| Tax-Saver FD | 5 years | Fixed, bank-set | Interest fully taxable |
PPF's main trade-off is its long mandatory lock-in in exchange for capital safety and complete tax-free status. ELSS offers the shortest lock-in among 80C options and historically higher returns, but with market risk. Many financial plans use a combination — PPF for guaranteed, long-term, tax-free safety, and ELSS or a regular SIP for higher-growth, market-linked goals.
Anyone who wants a government-guaranteed, zero-market-risk component in their portfolio, especially for retirement-horizon goals, benefits from PPF's safety and tax-free compounding.
Without access to employer-sponsored EPF, PPF is often the most accessible long-term, tax-advantaged retirement savings vehicle for the self-employed and freelancers.
For those still on the old tax regime, PPF doubles as both an 80C deduction tool and a guaranteed long-term saving instrument — a combination few other options offer together.
A PPF account can be opened on behalf of a minor, making it a useful, low-risk component within a longer-term education or marriage savings plan.
PPF maturity is calculated using the future value of an annuity due formula, compounded annually: M = P × [{(1+r)ⁿ − 1} ÷ r] × (1+r), where P is the yearly deposit, r is the annual PPF interest rate, and n is the tenure in years. Interest is calculated on the lowest balance between the 5th and last day of each month, and credited once a year on 31 March.
The PPF interest rate is set by the Ministry of Finance and reviewed every quarter. It has remained unchanged at 7.1% p.a. since April 2020 through Q1 of the current financial year, but the rate is subject to revision each quarter based on government bond yields and broader interest rate conditions, so it should not be assumed fixed for the entire 15-year tenure.
Yes — PPF enjoys EEE (Exempt-Exempt-Exempt) status: the deposit is deductible under Section 80C (old tax regime only), the interest earned every year is completely tax-free, and the final maturity amount on withdrawal is also fully tax-free. This applies regardless of which income tax regime you choose; only the 80C deduction itself is unavailable under the new regime.
You must deposit a minimum of ₹500 per financial year to keep a PPF account active, and a maximum of ₹1,50,000 per financial year. Deposits can be made as a single lumpsum or spread across up to 12 instalments in a year. Depositing before the 5th of a month earns interest for that month; depositing later means interest starts only from the following month.
Partial withdrawal is allowed from the 7th financial year onward, up to 50% of the balance at the end of the 4th preceding year or the immediately preceding year, whichever is lower. A loan against the PPF balance is available from the 3rd to the 6th year. Full premature closure before 15 years is allowed only for specific reasons like serious illness or higher education, and comes with a 1% retroactive interest rate reduction.
At 15-year maturity, you can withdraw the entire balance tax-free, or extend the account in blocks of 5 years — either with continued annual contributions (subject to the same ₹1,50,000 limit) or without further contributions, in which case the existing balance continues earning interest. You typically need to inform your bank or post office of your extension choice within one year of maturity.
Neither is universally better — PPF offers guaranteed, government-backed, completely tax-free returns with a 15-year lock-in, while ELSS offers a much shorter 3-year lock-in and historically higher (but market-linked, variable) returns with capital gains tax on withdrawal. Many investors use both: PPF as the safe, long-term anchor, and ELSS or SIP for higher-growth potential.
Yes, a parent or legal guardian can open a PPF account on behalf of a minor child. However, the combined deposit across the guardian's own PPF account and the minor's account cannot exceed ₹1,50,000 per financial year in total, since the overall 80C and PPF deposit limit applies per depositor, not per account.
NRIs (Non-Resident Indians) cannot open a new PPF account. However, if a resident Indian opened a PPF account and later became an NRI, the existing account can typically be continued until its original 15-year maturity, but generally cannot be extended further as an NRI. Rules have changed over the years, so NRIs should verify the current position with their bank.
A PPF calculator using the correct annual compounding formula and the current government-notified rate should closely match your passbook, assuming deposits are made consistently before the 5th of each month. Since the PPF rate can change every quarter, a calculator using today's rate for a full 15-year projection is necessarily an estimate — actual returns will reflect each quarter's notified rate as it changes over time.
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