Last Updated on Aug 24, 2022 by

PPF interest rate is relatively higher than a fixed deposit and many other small savings schemes. Let us look at what is a PPF, the PPF interest rate, how to calculate returns on your investment, and how the maturity proceeds are taxed.

What is PPF?

PPF’s full form is Public Provident Fund. It is a government-backed saving scheme that helps individuals create long-term wealth by investing small amounts regularly. The scheme offers you the safety of capital along with attractive, assured returns.

Features of Public Provident Fund

  • Tenure: A PPF account has a long-term tenure of 15 yrs. However, you can extend it by one or more blocks of 5 yrs. The benefit? You continue to earn interest on your investment if you request an extension within a year before the account’s maturity.
  • Investment amount: While the minimum deposit requirement in a financial year is Rs. 500, the maximum is Rs. 1.5 lakh. You can either deposit your investments in instalments or a lump sum.
  • Interest rate: The government revises the PPF account interest rate every quarter. The current PPF interest rate (for July to September of FY 2022-23) is 7.1% p.a.
  • Tax benefits: PPF enjoys a EEE (exempt-exempt-exempt) tax status; it is tax-free at every stage of investment – deposit, interest, and maturity proceeds.
  • Premature withdrawals: Premature withdrawals from a PPF account are allowed after the fifth year, subject to conditions.
  • Loan against a PPF: You can apply for a loan against a PPF in the third fiscal after the financial year of opening the account.

PPF interest rate

The government revises the PPF interest rate every quarter. The rate of interest is relatively higher than that of a fixed deposit. The PPF account interest rate for the current quarter (July to September) of FY 2022-23 is 7.1% p.a.


Historic PPF interest rates

Financial yearQuarterPPF interest rate (p.a.)
2022-2023April – June 20227.1%
2021-2022January – March 20227.1%
2021-2022October – December 20217.1%
2021-2022July – September 20217.1%
2021-2022April – June 20217.1%
2020-2021January – March 20217.1%
2020-2021October – December 20207.1%
2020-2021July – September 20207.1%
2020-2021April – June 20207.1%
2020-2021January – March 20207.9%
2019-2020October – December 20197.9%
2019-2020July – September 20197.9%
2019-2020April – June 20198.0%
2018-2019January – March 20198.0%
2018-2019October – December 20188.0%
2018-2019July – September 20188.0%
2018-2019April – June 20187.6%
2017-2018January – March 20187.6%
2017-2018October – December 20177.8%
2017-2018July – September 20177.8%
2017-2018April – June 20177.9%
2015-2016April – March 20168.70%
2014-2015April – March 20158.70%
2013-2014April – March 20148.70%
2012-2013April – March 20138.80%
2011-2012April – November 20118.0%
2011-2012December – March 20128.60%
2010-2011April – March 20118.0%
2009-2010April – March 20108.0%
2008-2009April – March 20098.0%
2007-2008April – March 20088.0%
2006-2007April – March 20078.0%
2005-2006April – March 20068.0%
2004-2005April – March 20058.0%

How and when is the PPF interest calculated?

Interest on a PPF is calculated on the lowest balance in the account between the fifth and the last day of the month. If you deposit before the fifth day of each month, interest for that month is calculated on that amount. If you deposit the sum after the fifth, the interest is calculated on the previous balance of the PPF account.


What is the best time to invest in a PPF account to maximise your returns?

Based on the above information, the chances of maximising your returns are higher when you make your monthly PPF investment before the fifth day. However, the difference is marginal – only a few hundred rupees. In case you want to make a lump sum investment for the entire financial year, consider investing before the 5th of April.

How often is PPF interest compounded?

Interest on a Public Provident Fund account is compounded annually. It is calculated monthly and credited at the year-end.

Formula to calculate interest on Public Provident Fund

A = P [({(1+i) ^n}-1)/i]

where,

A = maturity amount

P = the principal amount

I = the expected interest rate

N = the tenure for which the amount is invested

PPF calculator

Since calculating the expected PPF returns can be cumbersome, you can use the PPF calculator online for ease and convenience. All you have to do is launch an online PPF calculator and enter the deposit amount and tenure of investment. The calculator will return the estimated maturity proceeds you can expect to receive at the end of the tenure.

Note that the actual corpus may differ from the estimated figure as the PPF account interest rate is subject to quarterly revision. Nonetheless, knowing an approximate maturity amount can help you plan your long-term finances and make informed decisions to achieve your goals.

PPF FAQs

What is a PPF account?

A Public Provident Fund (PPF) Account is a small savings scheme run by the government that offers stable and guaranteed returns, a long-term wealth creation opportunity and attractive tax benefits to eligible individuals. Since it helps you create a sizable corpus at the end of the lengthy tenure, you can use the proceeds to meet several big-ticket financial goals, including children’s higher studies, wedding expenses, medical emergencies, and so on.

Why invest in PPF?

Along with being a long-term wealth-generating scheme, PPF can be an excellent way to diversify your investment portfolio. Due to the scheme’s assured returns, it can be a good option for risk-averse investors without a high-risk tolerance. What’s more, Public Provident Fund is also a tax-efficient investment, enjoying the EEE status.

How to open a PPF account?

You can open a PPF account by either visiting the nearest India Post branch or an authorised bank. You must submit an application form, furnish the required documents and your passport size photos, and adhere to the KYC guidelines.

What is the minimum initial deposit?

You can open a PPF account by making an initial deposit of as low as Rs. 100. After this, you are required to invest a minimum amount of Rs. 500 and a maximum of Rs. 1.5 lakh per fiscal.

What is the PPF interest rate?

It is the rate at which your PPF account earns interest. The government determines the rate.

What is the PPF interest rate for 2022?

The interest rate on PPF changes every quarter. The latest PPF interest rate is 7.1% for Q2 FY 2023.

When is the interest on PPF calculated?

This entirely depends on your investment amount and the PPF interest rate. You can use a PPF calculator to calculate the approximate returns.

The interest on PPF is calculated on the account balance on the fifth of every month. Ergo, making your deposit before the fifth of every month will help you earn the maximum benefit.

Will the PPF interest rate increase in future?

It depends on various factors, such as the government bond yield rate. The interest rate is not predetermined; there is no definite answer to whether the PPF interest rate will increase in the future. 

What is the minimum lock-in period for PPF?

PPF has a tenure of 15 yrs. However, this can be extended in blocks of 5 yrs.

How much will my maturity proceeds from PPF be after 15 yrs?

This entirely depends on your investment amount and the PPF interest rate. You can use a PPF calculator to calculate the approximate returns.

Can I make premature withdrawals from PPF?

Yes. You are allowed to make a premature withdrawal from your Public Provident Fund account after the fifth year, subject to conditions.

Can I avail a loan against a PPF?

Yes. You are allowed to avail a loan against a PPF in the third fiscal after the financial year of opening the account. The loan amount is limited to only 25% of the investment made at the end of the second fiscal preceding the year of applying for the loan. You can apply for a second loan on your PPF account if you have cleared your first loan.

What is the PPF loan interest rate?

The interest on the loan against PPF is 2% more than the interest you earn on the PPF account balance. Once the PPF loan interest rate is set, it will not change throughout the tenure of the loan.

Does a PPF account offer tax benefits?

Yes. PPF is considered to be extremely tax-friendly as it has an EEE status. This means it is tax-free at every stage of investment – deposit, interest, and maturity proceeds. You can claim a tax deduction of up to Rs. 1.5 lakh for the deposit made under Section 80C. 

What happens if I miss the PPF contribution for a year?

If you fail to contribute to your PPF account for a year, it will become dormant. To make it active, you are required to pay a minimum of Rs. 500 and a penalty of Rs. 50 for each year of missed contribution.

Can I open more than one PPF account?

No. Each individual can only open one PPF account. However, you are allowed to open a PPF account in the name of your minor child.

Aradhana Gotur
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