Last updated: November 2026. The PPF interest rate for October–December 2026 (Q3 FY 2026-27) is 7.1% per year, unchanged from the previous quarter. The government reviews small savings rates every quarter, so check the latest rate on the India Post or your bank’s website before you invest.
The Public Provident Fund (PPF) is one of the few investments in India that is backed by the Government of India, earns a fixed rate that is announced in advance every quarter, and is completely tax-free at maturity. It is not exciting, and it will not make you rich quickly, but for a long-term, risk-free part of your savings it is very hard to beat.
This guide explains how a PPF account actually works in 2026 — the deposit limits, the small rule about the 5th of the month that quietly changes your returns, when you can take a loan or withdraw money, how to extend the account after 15 years, and what the tax treatment looks like under the old and new tax regimes. We also run the numbers so you can see what ₹5,000 or ₹12,500 a month turns into.
PPF at a glance (2026)
| Feature | Details |
|---|---|
| Interest rate | 7.1% p.a. (Oct–Dec 2026), compounded yearly |
| Minimum deposit | ₹500 per financial year |
| Maximum deposit | ₹1.5 lakh per financial year (all your PPF deposits combined, including a minor’s account you operate) |
| Lock-in / tenure | 15 full financial years after the year of opening |
| Extension | In blocks of 5 years, any number of times |
| Loan | From the 3rd to the end of the 6th financial year |
| Partial withdrawal | Once a year, from the 7th financial year |
| Risk | Sovereign-backed; no market risk |
| Where to open | Any post office or authorised bank (SBI, other public sector banks and several private banks) |
Who can open a PPF account?
- Any resident Indian individual can open one account in their own name. You cannot hold two PPF accounts at the same time.
- A parent or guardian can open an account for a minor child. However, the ₹1.5 lakh yearly limit applies to the guardian’s own account and the minor’s account together.
- Joint accounts are not allowed. You can, and should, add a nominee.
- NRIs cannot open a new account. If you opened one while you were a resident and later became an NRI, you can usually keep it running until maturity, but you cannot extend it.
To open the account you need your KYC documents (Aadhaar, PAN, a photograph and address proof) and the opening form. Most banks now let existing customers open a PPF account online through net banking in a few minutes.
How PPF interest is calculated — the 5th-of-the-month rule
PPF interest is calculated every month on the lowest balance in your account between the 5th and the last day of that month. The total for the year is then added to your account on 31 March. This one detail matters more than most people realise:
- If you deposit on or before the 5th, that month’s interest includes your new deposit.
- If you deposit on the 6th or later, you lose that month’s interest on the deposit.
- If you invest a lump sum once a year, investing between 1 and 5 April earns interest for all 12 months.
Tip: Set up a standing instruction from your savings account for the 1st–4th of each month, or put your full ₹1.5 lakh in during the first five days of April. Over 15 years this simple habit is worth well over ₹2 lakh compared with depositing at the end of each year (see the table below).
What PPF can grow to: real numbers at 7.1%
The figures below assume the rate stays at 7.1% for all 15 years. In reality the rate is revised every quarter, so treat these as illustrations, not promises.
| How you invest | Total invested | Approx. value after 15 years |
|---|---|---|
| ₹1.5 lakh every year, deposited by 5 April | ₹22.5 lakh | ≈ ₹40.7 lakh |
| ₹1.5 lakh every year, deposited at the end of the year | ₹22.5 lakh | ≈ ₹38.0 lakh |
| ₹12,500 every month, by the 5th | ₹22.5 lakh | ≈ ₹39.4 lakh |
| ₹5,000 every month, by the 5th | ₹9 lakh | ≈ ₹15.8 lakh |
Notice the gap between the first two rows: the same ₹22.5 lakh, invested at a different time of year, produces about ₹2.7 lakh less. That is the 5th-of-the-month rule at work.
Tax benefits of PPF (old vs new regime)
PPF is often described as EEE — exempt, exempt, exempt:
- Deposits: deductible up to ₹1.5 lakh a year, but only if you file under the old tax regime (the familiar “Section 80C” deduction; the new Income-tax Act, 2025 that applies from April 2026 keeps an equivalent deduction under a new section number). Under the new regime there is no deduction for PPF deposits.
- Interest: tax-free every year, under both regimes.
- Maturity amount: fully tax-free, under both regimes.
So even if you have moved to the new tax regime, PPF still makes sense as a tax-free, risk-free long-term product. You simply lose the upfront deduction. Remember to show PPF interest as exempt income in your return.
Need money before 15 years? Your three options
1. Loan against PPF (years 3 to 6)
From the third financial year up to the end of the sixth, you can borrow up to 25% of the balance that stood in the account at the end of the second year before the year you apply. The interest on the loan is only 1% above the PPF rate, and it must be repaid within 36 months. If you repay late, the interest charged goes up sharply, so borrow only what you can clear on time.
2. Partial withdrawal (from year 7)
From the seventh financial year onwards, you can make one withdrawal a year of up to 50% of the balance at the end of the fourth preceding year or the end of the immediately preceding year, whichever is lower. Withdrawals are tax-free and do not have to be repaid.
3. Premature closure (after 5 years, only for specific reasons)
After five complete years you can close the account early for a serious illness of yourself, your spouse, children or parents; for higher education of yourself or your children; or if you become an NRI. The interest for the whole period is then recalculated at 1% less than the rates that applied.
Important: PPF is not a substitute for an emergency fund — the money is simply not available in the early years. Keep 6 months of expenses in a liquid place first. Our emergency fund guide explains how much you need and where to park it.
What happens at maturity: close or extend?
After 15 years you have three choices:
- Close the account and take the entire balance, tax-free.
- Extend for 5 years with fresh deposits. You must submit the extension form (Form 4) to your bank or post office within one year of maturity. If you miss this window and keep depositing, the new deposits will not earn interest.
- Extend for 5 years without deposits. This happens automatically if you do nothing. The balance keeps earning interest, and you can withdraw any amount once a year.
Extension can be repeated in 5-year blocks for as long as you like, which makes PPF a useful tax-free “parking” account in your 50s and 60s.
PPF vs other popular options
| Option | Return | Risk | Lock-in | Tax on returns |
|---|---|---|---|---|
| PPF | 7.1% (fixed each quarter) | Very low | 15 years (partial access from year 7) | Tax-free |
| Bank fixed deposit | Varies by bank and tenure | Very low | Flexible | Taxable at your slab |
| ELSS mutual fund | Market-linked | High | 3 years | Gains above the yearly exemption taxed |
| Equity SIP (non-ELSS) | Market-linked | High | None | Capital gains tax |
Many people use PPF for the safe, debt part of their long-term savings and equity mutual funds for growth. If you are deciding how to invest the equity part, read our guide on SIP vs lump sum investing. And if you are just starting out, our article on the difference between saving and investing is a good first step.
Common PPF mistakes to avoid
- Missing the ₹500 minimum in a year. The account becomes “discontinued”. You can revive it by paying ₹50 penalty for each missed year plus ₹500 for each of those years, but you cannot take a loan or withdraw while it is inactive.
- Depositing more than ₹1.5 lakh. The excess earns no interest and gives no tax benefit, and it will be refunded without interest.
- Depositing after the 5th. A small habit that costs real money over 15 years.
- Forgetting to submit Form 4 when you want to keep contributing after maturity.
- Not adding a nominee. It takes two minutes and saves your family a lot of paperwork.
Frequently asked questions
Is the PPF interest rate fixed for 15 years?
No. The rate is set by the Ministry of Finance every quarter and applies to your entire balance, old and new. It has stayed at 7.1% for a long stretch, but it can go up or down.
Can I move my PPF account from the post office to a bank?
Yes. You can transfer the account between a post office and an authorised bank, or between branches, without breaking the 15-year period. Submit a transfer request at the branch where the account is currently held.
Can my PPF balance be attached by a court to pay a debt?
PPF balances are protected from attachment under a court decree for your debts, which is one reason the scheme is popular for long-term family security. Income-tax and certain government dues are treated differently, so check with a professional if this applies to you.
Is PPF worth it under the new tax regime?
For many people, yes. You lose the deduction on deposits, but a 7.1% tax-free return with government backing is still attractive compared with a taxable fixed deposit, especially if you are in a higher tax slab.
What happens to a PPF account if the holder dies?
The account is closed and the balance is paid to the nominee or legal heirs, even if 15 years have not passed. The nominee cannot continue the account.
Bottom line
PPF rewards patience and discipline. Open the account early, deposit before the 5th, add a nominee, and let it compound tax-free. Pair it with an emergency fund for short-term needs and with equity investments for growth, and you have a simple, sturdy plan.
Disclaimer: This article is for general education only and is not personalised financial or tax advice. Interest rates and rules can change; confirm the current details with India Post, your bank or a qualified adviser before investing. Read our full disclaimer.