Public Provident Fund - Calculate your tax-free returns
| Year | Opening Balance | Investment | Interest Earned | Closing Balance |
|---|
PPF falls under EEE category, making it one of the most tax-efficient investment options in India for long-term wealth creation.
PPF interest is calculated on the lowest balance between the 5th and the last day of each month, and it is compounded annually. The government revises the PPF interest rate every quarter — as of 2026, it stands at 7.1% per annum. This means deposits made after the 5th of a month do not earn interest for that month. Understanding this timing is crucial to maximising your returns over the 15-year lock-in period.
To squeeze the most interest out of your PPF, deposit your annual contribution as a lump sum between the 1st and 5th of April each year. This ensures the full amount earns interest for all 12 months. If you invest in monthly instalments instead, try to deposit before the 5th of every month. Delaying even by a day to the 6th means you lose one full month of interest on that deposit.
PPF offers tax-free returns under the EEE (Exempt-Exempt-Exempt) regime, making it unbeatable for conservative investors in the 30% tax bracket. FDs offer flexibility and shorter tenures but interest is fully taxable. NPS provides market-linked returns with partial tax benefits but locks your money until age 60. For a risk-free, long-term savings goal like retirement or a child's education, PPF remains one of India's best options.
After the initial 15-year maturity, you can extend your PPF account in blocks of 5 years — either with or without fresh contributions. If you choose to extend with contributions, the full balance continues to earn interest and you can still claim Section 80C deductions. You must submit Form H to your bank or post office within one year of maturity. If no request is made, the account defaults to extension without contributions.
Partial withdrawals from PPF are allowed from the 7th financial year onward, up to 50% of the balance at the end of the 4th preceding year. From the 3rd to the 6th year, you can take a loan against your PPF balance at a nominal interest rate of 1% above the prevailing PPF rate. These features make PPF a useful liquidity tool for emergencies while keeping the bulk of your corpus intact and growing tax-free.
The PPF interest rate for 2025-26 is 7.1% per annum, compounded annually. The rate is reviewed quarterly by the government but has remained stable since 2020.
The maximum annual deposit in PPF is ₹1.5 lakh. The minimum is ₹500 per year. You can make deposits in lump sum or up to 12 instalments per year.
Yes, PPF enjoys EEE (Exempt-Exempt-Exempt) tax status. Your contribution qualifies for 80C deduction (up to ₹1.5L), the interest earned is tax-free, and the maturity amount is completely tax-free.
Yes, PPF can be extended in blocks of 5 years after the initial 15-year maturity. You can extend with or without further contributions, and the account continues earning interest.
Deposit before the 5th of each month. PPF interest is calculated on the minimum balance between the 5th and end of month. Depositing on April 1-5 each year maximizes annual interest.