PPF Investment Guide 2026: Interest Rate, Rules, Tax Benefits & Calculator
By MoneyTool Editorial Team
Public Provident Fund (PPF) is one of India's most trusted long-term savings instruments — government-backed, completely tax-free, and available to every Indian citizen. Whether you are a salaried employee, self-employed professional, or business owner, PPF provides a safe, disciplined way to build a substantial corpus over 15 years.
PPF at a Glance (2026)
| Feature | Details |
|---|---|
| Current Interest Rate | 7.1% per annum (compounded annually) |
| Minimum Investment | ₹500 per financial year |
| Maximum Investment | ₹1,50,000 per financial year |
| Lock-in Period | 15 years (extendable in 5-year blocks) |
| Tax Treatment | EEE — Exempt at investment, interest, and withdrawal |
| Partial Withdrawal | From 7th year — up to 50% of balance |
| Loan Facility | From 3rd to 6th year — up to 25% of 2nd year balance |
| Who Can Open | Indian citizens (not NRIs, HUFs, or trusts) |
Why PPF is Called EEE — Triple Tax Exempt
- Investment: Up to ₹1.5 lakh/year qualifies for Section 80C deduction
- Interest: Annual interest earned is completely tax-free
- Maturity: The entire corpus at maturity is tax-free — no capital gains tax
No other fixed-income instrument in India offers this combination of government guarantee + triple tax exemption. Even EPF, which is similar, is taxable if you withdraw within 5 years of service.
PPF Growth — What ₹1.5 Lakh/Year Becomes
| Year | Cumulative Investment | Balance (at 7.1%) |
|---|---|---|
| Year 5 | ₹7,50,000 | ₹8,97,194 |
| Year 10 | ₹15,00,000 | ₹21,24,285 |
| Year 15 (Maturity) | ₹22,50,000 | ₹40,68,209 |
| Year 20 (1st Extension) | ₹30,00,000 | ₹66,58,288 |
| Year 25 (2nd Extension) | ₹37,50,000 | ₹1,03,08,015 |
If you invest the maximum ₹1.5 lakh annually and extend the account for 10 years beyond maturity (25 years total), your PPF corpus grows to over ₹1 crore — entirely tax-free. Use the PPF calculator to customise projections for your investment amount.
Best Time to Deposit in PPF
PPF interest is calculated on the minimum balance between the 5th and last day of each month. This means:
- Deposit before the 5th of each month to earn interest for that month
- Depositing on the 6th or later means you lose one month of interest
- Annual lump sum depositors: deposit before April 5th to earn interest for the entire year
- A lump sum deposited on April 1st earns interest for all 12 months
PPF vs Other Fixed-Income Options
| Instrument | Rate | Tax on Interest | Lock-in | Safety |
|---|---|---|---|---|
| PPF | 7.1% | Tax-free | 15 years | Sovereign |
| Bank FD | 6.5–7.5% | Taxable (slab) | Flexible | DICGC insured upto ₹5L |
| NSC | 7.7% | Taxable (slab) | 5 years | Sovereign |
| Sukanya Samriddhi | 8.2% | Tax-free | 21 years | Sovereign |
| Senior Citizen FD | 7.5–8.0% | Taxable (slab) | 5 years | DICGC insured upto ₹5L |
Conclusion
PPF is an excellent foundation for any long-term financial plan. It suits conservative investors, those in high tax brackets, and anyone who values capital safety. The 15-year lock-in — often seen as a disadvantage — actually enforces financial discipline and lets compounding work its magic. Start early, deposit consistently before the 5th of each month, and consider extending beyond 15 years for a truly transformative corpus.
Frequently Asked Questions
What is the current PPF interest rate in 2026?
The PPF interest rate is currently 7.1% per annum, compounded annually. The rate is set by the government and reviewed quarterly, though it has remained at 7.1% since April 2020. Interest is calculated on the minimum balance between the 5th and last day of each month.
What is the minimum and maximum PPF investment per year?
The minimum annual contribution is ₹500 and the maximum is ₹1,50,000 per financial year. You can make up to 12 deposits per year in any amount as long as the total does not exceed ₹1.5 lakh. Contributions above ₹1.5 lakh do not earn interest and are not eligible for tax deduction.
When can I withdraw from PPF?
Full withdrawal is allowed only at maturity (after 15 years). Partial withdrawal is permitted from the 7th year onwards — up to 50% of the balance at the end of the 4th year or the previous year, whichever is lower. Premature closure before 15 years is only allowed in exceptional cases like serious illness or higher education.
Can I extend my PPF account after 15 years?
Yes. After maturity, you can extend the account in blocks of 5 years — either with further contributions (and continue earning interest + tax benefits) or without contributions (balance continues to earn interest tax-free). Many investors extend multiple times to build a large tax-free retirement corpus.
Is PPF better than ELSS for tax saving?
PPF is risk-free with guaranteed returns and full tax exemption (EEE — exempt at investment, interest, and withdrawal). ELSS is market-linked with historically higher returns but with risk and a 3-year lock-in. PPF suits conservative investors with long horizons; ELSS suits those comfortable with equity risk seeking higher potential returns.
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