PPF, or Public Provident Fund, is one of India's most trusted and popular savings schemes. It's backed by a government guarantee, the interest is tax-free, and it builds a solid corpus over the long term. This guide explains it simply — what PPF is, how much interest you get, what the tax benefits are, and how to open an account.
Interest rate 7.1% per annum (set by the government each quarter) · Lock-in 15 years · Deposit ₹500 to ₹1.5 lakh per year · Both interest and maturity are tax-free (EEE) · Full government guarantee.
PPF is a long-term government savings scheme, launched in 1968. You deposit a little money each year, on which the government pays a fixed interest. The biggest advantage — it's completely safe because it carries a government guarantee, and its interest doesn't go up and down like the stock market.
The current PPF interest rate is 7.1% per annum, compounded annually. This rate is set by the government (Ministry of Finance) every quarter. Notably, this rate has held steady at 7.1% since April 2020 — making it quite reliable. Every bank and post office offers the same rate, because it's a central government scheme.
PPF has "EEE" status, which means tax exemption at three stages:
This three-way exemption makes PPF different and attractive compared to schemes like FDs, because FD interest is taxable.
| Item | Rule |
|---|---|
| Minimum deposit | ₹500 per year |
| Maximum deposit | ₹1.5 lakh per year |
| Lock-in period | 15 years (extendable in 5-year blocks) |
| Interest rate | 7.1% p.a. (reviewed quarterly) |
| Partial withdrawal | From the 7th year |
| Loan facility | From 3rd to 6th year |
PPF interest is calculated on the lowest balance between the 5th and the end of each month. So if you deposit before the 5th, you earn interest for that entire month. Depositing a lump sum at the start of the year (April) earns the most interest.
PPF is best for those who want to build money over the long term with zero risk — such as for retirement, children's education or marriage. If you don't want market risk and want tax-free, guaranteed returns, PPF is a great option. However, if you want higher returns and can take some risk, options like SIP may give more over the long term (but without a guarantee). Many people keep a bit of both.
It's currently 7.1% per annum, steady since April 2020. The government sets it every quarter, so it may change in the future.
Between ₹500 minimum and ₹1.5 lakh maximum per year. Depositing more than that earns no interest on the excess.
The full amount is generally available only after 15 years. But partial withdrawal is allowed from the 7th year, with some relaxations for situations like serious illness or higher education.
PPF interest is fully tax-free (EEE) with a 15-year lock-in. FD interest is taxable but the tenure is flexible. For long-term, tax-free savings, PPF is considered better.
Yes, PPF carries a central government guarantee, making it one of the safest savings options. There's no market risk.
This article is for general information only, not financial advice. The PPF interest rate can change every quarter; the above is based on the latest available rate (7.1%). Check with your bank/post office or the government website for the current rate.