What is PPF?
The Public Provident Fund (PPF) is a long-term savings scheme backed by the Government of India. It pays a fixed interest rate set every quarter, has a 15-year lock-in, and is one of the few investments where the deposits, the interest and the maturity amount can all be tax-free. You can open a PPF account at a post office or at most major banks.
Key PPF features
| Interest rate | 7.1% a year (July–September 2026), compounded yearly |
|---|---|
| Deposit limits | ₹500 minimum, ₹1,50,000 maximum per financial year |
| Lock-in | 15 years, extendable in 5-year blocks |
| Loan | From the 3rd to the 6th financial year |
| Partial withdrawal | From the 7th financial year |
| Tax | Interest and maturity are tax-free; deposits deductible under the old regime |
How to use the PPF calculator
- Yearly deposit: the amount you plan to put in every financial year.
- Interest rate: set to the current rate by default. You can test other rates, since it can change.
- Time period: 15 years, or more if you plan to extend.
The calculator assumes you deposit before 5 April each year, so the full amount earns interest for the whole year.
PPF calculation formula
With the yearly deposit made at the start of each year and interest compounded annually:
where P is the yearly deposit, i the annual rate and n the number of years.
Worked example
Depositing the maximum ₹1,50,000 every year for 15 years at 7.1% gives a maturity value of about ₹40,68,209. You deposit ₹22,50,000 in total and earn about ₹18,18,209 as tax-free interest.
The power of extending PPF
₹1,50,000 deposited every year at 7.1%:
| Period | Deposited | Maturity value |
|---|---|---|
| 15 years | ₹22,50,000 | ₹40,68,209 |
| 20 years | ₹30,00,000 | ₹66,58,288 |
| 25 years | ₹37,50,000 | ₹1,03,08,015 |
Extending by two 5-year blocks turns about ₹41 lakh into more than ₹1 crore, all of it tax-free under current rules.
Who should invest in PPF?
- People who want guaranteed, government-backed returns with no market risk.
- Taxpayers in the old regime looking for a deduction on their deposits.
- Long-term savers building a safe base for retirement or a child's future. Saving for a daughter? Sukanya Samriddhi currently pays more. For a pension, compare with the NPS calculator.
Because the money is locked in, PPF works best alongside more flexible options. Compare it with a fixed deposit or recurring deposit for shorter goals or a SIP for higher long-term growth.
Frequently asked questions
What is the current PPF interest rate?
The PPF interest rate for July–September 2026 is 7.1% a year, compounded annually. The Ministry of Finance reviews it every quarter.
How much can I invest in PPF?
You must deposit at least ₹500 and can deposit up to ₹1,50,000 in a financial year, in one go or in instalments.
When should I deposit money in PPF to earn maximum interest?
Interest for each month is calculated on the lowest balance between the 5th and the last day of that month. Depositing before the 5th of the month, and ideally before 5 April for the whole year, earns interest for the full period.
Can I withdraw money from PPF before 15 years?
Partial withdrawals are allowed from the 7th financial year, subject to limits. Loans against the balance are available from the 3rd to the 6th year. Premature closure is allowed after 5 years only for specific reasons such as serious illness or higher education.
What happens after 15 years?
You can close the account and withdraw everything, or extend it in blocks of 5 years, with or without further deposits. The balance keeps earning interest during the extension.
Is PPF tax-free?
PPF has exempt-exempt-exempt (EEE) status: the interest and the maturity amount are tax-free. Deposits also qualify for a deduction of up to ₹1.5 lakh a year under the old tax regime. The new tax regime does not allow this deduction.
Sources
- National Savings Institute, Ministry of Finance
- Department of Economic Affairs – small savings interest rates
- India Post – post office savings schemes
Last updated 19 September 2026. Results are estimates for planning only and are not investment, tax or legal advice. See our disclaimer.