The central government established the Public Provident Fund (PPF) as a long-term savings mechanism. It provides tax advantages on both contributions and withdrawals following the lock-in period. This system, which went into effect on July 1, 1968, is endorsed by the government and aims to offer old-age income security to self-employed people and those working in the unorganised sector. Despite the fact that the plan is optional, its popularity has been fueled by guaranteed returns, lucrative PPF interest rates, and income tax benefits.
What is the Public Provident Fund Interest Rate?
The current yearly compound PPF interest rate is 7.1 per cent per annum.
Every year, the Finance Ministry determines the interest rate, which is paid on March 31st. Every month, interest is computed on the lowest balance between the fifth and final days of the month.
How is PPF Account Interest Calculated?
PPF interest is compounded yearly. F = P[((1+i)n-1)/i] is the formula for this.
In this case,
F = Maturity value of PPF account
P = Annual instalments n = number of years
i = PPF interest rate /100
For example, if you make monthly contributions of Rs1,000,000 to your PPF investment for 15 years at 7.1 percent, your maturity profits will be Rs31,17,276 at the end of 15 years.
The Public Provident Fund (PPF) was established in India in 1968 with the goal of mobilising small savings in the form of an investment with a return on it. It is still a popular way for many investors to save since the earnings are tax-free. It is also known as a savings-cumulative-tax savings investment vehicle since it allows one to create a retirement corpus while saving on annual taxes. This is why anybody searching for a secure investment choice that allows them to avoid taxes while earning assured returns should create a PPF account. The attractive PPF interest rates make this an even more lucrative investment option.
Also Read: A Guide for Calculating PPF
PPF Interest Rate 2023

Key Takeaways
- Eligibility – You must be an Indian resident to be eligible.
- Account Entry Age – There is no specified age for account opening.
- Investments – Minimum INR 500/ Year Maximum INR 1.5 Lakhs/Year. Investments can be made in lump sums or in multiples of Rs50. There is no limit to the number of instalments that can be made in a fiscal year (earlier it used to be 12).
- PPF Interest Rate – Interest is compounded yearly at 7.10%. The PPF interest rate for the calendar month should be computed on the lowest balance in the account between the closing of the fifth day and the end of the month.
- Tenure – The tenure is 15 years. After 15 years, the account can be extended with or without a deposit in five-year increments. There is no limit to the number of extensions that can be granted.
- Exit Option – Premature closing of a PPF account is not permitted until the account holder dies or after five years from the end of the fiscal year in which the account is created if the money is needed for the treatment of a severe disease or to support higher education.
The following table provides quick info about PPF interest rates and other key features
PPF – Key Information | |
PPF Interest Rate | 7.1% per annum. |
Minimum Investment | Rs.500 |
Maximum Investment | Rs 1.5 lakh per annum. |
Tenure | 15 years |
Risk Profile | Offers guaranteed, risk-free returns |
Tax Benefit | Up to Rs.1.5 lakh under Section 80C |
Interest on PPF Account for Minors
In situation of a parent investing money into a PPF account in lieu of their children under 18 years of age, the income is combined. The interest rate, however, remains unchanged and follows the rate as prescribed for that year.

Does the PPF Account Earn Interest After Maturity?
However, if the PPF account remains uninvested for more than a year after maturity, the account holder will be unable to make deposits in consecutive years. You would still be able to avail the PPF interest rate accumulated so far. The PPF account matures after 15 years, however, contributions must be made for a total of 16 years. This is due to the fact that the 15-year term begins with the conclusion of the fiscal year in which the account is created. The PPF account effectively matures on the first day of the 17th year.
PPF Interest Rate Comparison with Other Investment Options
Investment Type | Interest Rate | Lock-in Period |
National Saving Certificate | 6.8% | 15 years |
Tax Saver Fixed Deposit | 3.5 – 7.5% | 5 years |
Sukanya Samridhi Yojana | 7.6% | 21 years from account opening or the marriage date of the account holder |
Public Provident Fund | 7.1% | 15 years |
5 Year Post Office Time Deposit Account | 6.7% | 5 years |
Key Features of PPF
Tenure
A PPF account has a 15-year maturity period. After the account matures, you have the option of withdrawing the full sum and closing the account or extending it for another five years with or without making additional contributions. The extension can be done in five-year increments indefinitely.
Limit
The Public Provident Fund (PPF) is a popular fixed-income investment option among investors. Individuals can invest up to Rs1.5 lakh per year in a PPF account, which also gives a tax benefit under Section 80C of the Income Tax Act. The account has a 15-year validity period, and the account user is required to deposit a minimum of Rs500 each fiscal year. PPF interest rate is set by the government every quarter. The interest rate on PPF for the quarter ending June 30, 2022, is 7.1 % per annum (compounded yearly).

The Opening Balance
A PPF account can be opened with an opening balance of INR 100. Any investments over 1.5 lakh will not accrue any interest and would also not be responsible for any tax saving.
Frequency of Deposit
Account holders need to make a minimum deposit of INR 500 in one fiscal year to keep the account functional. While this is the lower limit, there is no certain cap on the deposit frequency. The account holder can deposit money without any sort of limitation.
Deposit Mode
A plethora of banks and post offices offer online money deposit facilities to PPF account holders. One can opt for an NEFT transfer, deploy an ECS mandate, and Standing Instruction.
Nominee
An account holder can nominate more than a single nominee to the PPF account. He/she can also share the percentage of the share in situations where there is more than a single nomination. That being said, a nominee is not permitted if an account is opened on behalf of minors.
Joint Accounts
Married couples can open a PPF account in the name of the spouse. This enables an individual invest to a total of INR 3 lakh per annum.
Risk
Supported by the Indian government, investing in a PPF account entails minimal risk.
Benefits of the PPF Scheme
PPF investments are risk-free. It is because there are fewer hazards and greater advantages. It is commonly seen as a pension tool. You can withdraw only the interest, leaving the principal undisturbed.
Capital Appreciation Over Time
PPF converts modest investments from investors into long-term capital appreciation while also providing some income. This is the government’s goal in encouraging investors to invest in the Public Provident Fund. As a result, it has a 15-year lock-in period and can be extended in 5-year increments. PPF investment is the perfect post-retirement fund for meeting old-age financial needs.
Consistent Returns with Low Risk
Investors who are risk-averse should definitely establish a PPF investing account. This investment option is perfect for Investors seeking steady returns as well as the protection of their money. The sovereign guarantee makes it an even more secure investing strategy. Invest idle money or save a portion of your salary to earn profits through the secure investment of the PPF plan.
Loans on PPF
Another advantage of a PPF investment is that it may be used to meet both long-term and short-term objectives. It is also useful in times of financial difficulty since you can request a loan against your PPF.
You can borrow against your PPF between the third and sixth years. The loan amount disbursed is limited to a maximum of 25% of the investment amount for the second year.
The investment for the second year is that of the year preceding the loan application year. If you return it in 36 months or by the sixth year, you can apply for a second loan in the sixth year.
Withdrawal
When faced with financial difficulties, you can withdraw a portion of your PPF funds From the fifth-year forward, you can make one partial withdrawal. Partial withdrawals from the PPF investment account can be made in one of the following ways:
- 50% of the invested amount until the 4th year
- 50% of the account balance until the preceding financial year
Advantages of Tax Savings
PPF investments provide tax savings through Section 80C deductions. It is one of the few investment plans in India that has Exempt-Exempt-Exempt (EEE) tax status. The tax-free sum deposited in the Public Provident Fund in each fiscal year is exempt from tax up to Rs. 1,50,000. The interest earned on a PPF is likewise exempt from taxation. Furthermore, the maturity amount, including the principal and interest, is tax-free at the moment of withdrawal.
Also Read: PPF Tax Exemption

PPF Interest Compounded Annually
PPF interest is compounded yearly. F = P[((1+i)n-1)/i] is the formula for this.
In this case,
F = Maturity value of PPF account
P = Annual instalments n = number of years
i = PPF interest rate /100
For example, if you make monthly contributions of Rs.1,000,000 to your PPF investment for 15 years at 7.1 percent, your maturity profits will be Rs. 31,17,276 at the end of 15 years.
The Public Provident Fund (PPF) was established in India in 1968 with the goal of mobilising small savings in the form of an investment with a return on it. It is still a popular way for many investors to save since the earnings are tax-free. It is also known as a savings-cumulative-tax savings investment vehicle since it allows one to create a retirement corpus while saving on annual taxes. This is why anybody searching for a secure investment choice that allows them to avoid taxes while earning assured returns should create a PPF account. The attractive PPF interest rates make this an even more lucrative investment option.
Did You Know?
- A PPF account can be opened by any resident Indian. Each individual can open one PPF account. There is an option to transfer PPF account from a bank to post office or vice versa all across India.
- Joint ownership, on the other hand, is banned. Accounts can be opened by minors as well. To do so, the guardian would have to act on his or her behalf. Furthermore, the guardian should be either a mother or a father and no one else.
- Many investors are unaware that they may withdraw their money in instalments. However, this option will not be accessible for more than a year. This means that if for example, your account matured in April of 2017, you’ll be able to withdraw in instalments until March 31st, 2018.
- As a PPF account holder, you are only entitled to get a loan from the third to the sixth fiscal year of holding the PPF account.
Also Read: NPS vs PPF
PPF Interest Rate FAQs
The Public Provident Fund interest rate is 7.1% currently.
The lowest deposit to a PPF account is Rs500 annually, while a maximum investment of Rs. 1.5 lakh annually is allowed. This restriction applies to all investments made in your name or in the name of a minor. You have the option of contributing a flat payment or a monthly instalment.
At an interest rate of 7.1% if a person invests INR150,000 in a year, the actual payout at the end of 15 years would be 40,68,209.
The interest rate for PPF is fixed by the Ministry of Finance and all banks follow the standard prescribed rate of interest
While FD offers a shorter tenure, the income generated is taxable. Both FD and PPF have their own pros and cons. That being said, PPF is good for investors with a long-term plan, while FD is an appropriate option for investors who have a short term investment plan
The PPF interest rate as of 2022 is 7.1% pa.
The PPF interest is fixed for individuals across age groups. In 2022 it is at 7.1%pa
No, the income generated from a PPF account is exempted from any form of taxation
The best practice is to login to the online portal and checking the passbook section for the right entries.
In case of the demise of the PPF account holder, the amount can be claimed by the nominee or a legal heir.
The maximum amount that can be deposited under the PPF scheme is 150,000
A PPF account holder can withdraw the money from the PPF account upon maturity (15 years).
Account holders can initiate a standing instruction or ECS with their respective banks to avail an automatic deduction
A PPF account holder can avail of a loan after the third fiscal year till the end of the sixth financial year.
No, the interest earned on the PPF account is exempted from Income Tax up to Rs1.5 lakh.