PPF Explained
The short version
The Public Provident Fund is a savings account the government runs through post offices and banks. You put in up to ₹1.5 lakh a year, it earns a rate the government sets every quarter, and after 15 years you take out everything, interest included, without paying tax on it.
Interest
a year, Oct–Dec 2026
Lock-in
extendable by 5
Per year
min to max deposit
Tax
tax-free all the way
The rate is reset every quarter by the Finance Ministry. It has stayed at 7.1% for several years, but it is not fixed for your 15 years.
Step by step
How PPF works
- 01
Open one account
At a post office or a bank that offers PPF, often through net banking. One account per person, plus one you can run for each minor child.
- 02
Deposit every year
Anything from ₹500 to ₹1.5 lakh in a financial year, in one go or in parts. Miss the ₹500 minimum and the account is marked inactive until you pay a small fee.
- 03
Interest adds up yearly
Interest is worked out each month on your lowest balance between the 5th and the month end, and added to the account every 31 March, so it compounds.
- 04
Take it all after 15 years
The full balance is yours after 15 financial years. You can also keep the account going in blocks of 5 years, with or without new deposits.
See it
Play with the numbers
Move the sliders and tap the chips. Everything recalculates as you go, using the scheme’s own rules.
What you can do in each year
You can borrow up to 25% of the balance at the end of year 2, at 1% above the PPF rate, repayable within 36 months.
How your PPF grows
7.1% is the rate for Oct–Dec 2026. Deposits are assumed by 5 April each year; extension years keep the same deposit.
By year 15 the interest is 45% of the balance: your money grows 1.8× without any tax on it.
Why the deposit date matters
on ₹1,50,000
lost by maturity
Interest each month is paid on the lowest balance between the 5th and the last day. The green days are the window that counts for that month.
Key rules
The rules that matter
Who can open
NRIs can’t open a new one
Lock-in
counted from the end of the year you open it
Loan
up to 25% of an earlier balance
Part withdrawal
once a year, about half the balance
Early closure
only for illness, education or moving abroad, with 1% less interest
Safety
backed by the Government of India
Tax
How it’s taxed
PPF is one of the few products that is tax-free at all three stages. People call that “EEE”: exempt, exempt, exempt.
Put in: Up to ₹1.5 lakh a year under Section 80C, in the old tax regime only.
Grows: The yearly interest is not added to your income.
Take out: The maturity amount and withdrawals are not taxed.
On the new tax regime you lose the 80C deduction, but the interest and the maturity amount are still tax-free.
Is it for you
Who it suits
A good fit if
- You want a guaranteed, government-backed place for long-term money.
- You can leave the money alone for 15 years.
- You want tax-free interest, whichever tax regime you are on.
- You like a habit: one deposit a year, nothing to track.
Think twice if
- !You might need the money in the next few years: it is locked, with only a small loan or withdrawal window.
- !You expect inflation to stay high: 7.1% is steady but may not beat it by much.
- !You already put ₹1.5 lakh into other 80C options: the cap is shared.
Avoid these
Common mistakes
Depositing after the 5th
Interest for a month is paid on the lowest balance between the 5th and the month end. Money that lands on the 6th earns nothing for that month. A yearly deposit made by 5 April earns interest for the full year.
Missing the yearly ₹500
The account goes inactive. You can revive it by paying ₹500 for each missed year plus a ₹50 penalty a year, but until then you can’t take a loan or withdraw.
Putting in more than ₹1.5 lakh
The cap covers your own account and any minor’s account you run, together. Anything above it earns no interest and gets no deduction.
Letting it lapse at 15 years
If you do nothing it carries on without new deposits, still earning interest. To keep depositing you must ask to extend within a year of maturity.
Compare
PPF next to similar options
PPF
Figures are as at the time of writing; tax rules on mutual fund gains and FD interest change with budgets.
How to open
How to open PPF
- 1
Pick where
Any post office, or a bank that offers PPF (most large public and private banks do). Many let you open it inside net banking in a few minutes.
- 2
Fill the form
Give your KYC details and a nominee. A bank account helps for transfers.
- 3
Make the first deposit
At least ₹500. Set a reminder to deposit by 5 April each year to earn interest for the whole year.
Documents you’ll need
- Aadhaar
- PAN
- Address proof (if not on Aadhaar)
- A passport-size photo
- Nominee details
You open PPF directly with a post office or a bank. Truely Money does not open accounts or take applications.
FAQ
Questions people ask
Can I have two PPF accounts?
No. One account per person. A second one opened by mistake is merged or closed, and the extra one earns no interest. You can run separate accounts for each minor child as guardian, within the same ₹1.5 lakh yearly cap.
Is the 7.1% rate locked for 15 years?
No. The government resets small savings rates every quarter, and the new rate applies to your whole balance from then on. It has stayed at 7.1% since 2020 but can move either way.
What happens after 15 years?
You can close the account and take the money, let it carry on without new deposits (it keeps earning interest), or extend it in 5-year blocks with deposits by applying within a year of maturity.
Can I take money out early?
From the 7th financial year you can make one partial withdrawal a year, roughly up to half your balance from four years earlier. Between the 3rd and 6th years you can take a loan instead. Full early closure is allowed after 5 years only for specific reasons.
Does PPF still make sense on the new tax regime?
You lose the 80C deduction, but the interest and the final amount stay tax-free. Whether it is worth it then depends only on whether a guaranteed tax-free 7.1% suits that part of your money.
Can my PPF be seized for a debt?
A PPF balance cannot be attached under a court decree for your debts, which is one reason people treat it as a safe base.
Go further
Related tools and guides
Checked against official sources on 21 Oct 2026. Government rates and rules change, so confirm the latest on the official site before you act. This page explains how the scheme works and is not personal financial advice. Truely Money is independent, is not affiliated with Ministry of Finance or any government body, and does not take applications.