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Public Provident Fund (PPF) scheme, introduced in 1968 by the Finance Ministry’s National Savings Institute aims to encourage small savings while offering tax benefits and guaranteed returns. It’s an ideal choice for those seeking secure long term investments with minimal risk.
With a minimum investment of just ₹500, PPF account appeals to a broad audience. Its popularity is due to tax advantages, assured returns and stability. This blog will explore PPF Interest rate 2025-26, key aspects such as PPF tax benefits, maturity rules, PPF eligibility criteria.
What is PPF?
Public Provident Fund scheme is a long term investment option favored by individuals seeking stable and high returns. PPF primary goal is to safeguard the principal amount deposited by account holders.
When you open a PPF account, your money is systematically deposited each month and interest is compounded. PPF scheme along with others scheme like Senior Citizens Savings Scheme (SCSS), Sukanya Samriddhi Yojana and National Savings Certificate (NSC) was introduced by the government to promote small savings and ensure returns on investments.
PPF enjoys EEE status, meaning your investment, the interest earned and the maturity amount are all completely tax-free. PPF accounts have a minimum tenure of 15 years extendable indefinitely in blocks of five years.
With a minimum investment of ₹500 and a maximum of ₹1,50,000 deposits can be made either in a lump sum or in up to 12 installments annually. A minimum deposit must be made each year. Account holders are guaranteed a fixed return annually with interest rates adjusted quarterly to align with market trends.
Opening a PPF account allows individuals to claim deductions under section 80C of the Income Tax Act for the amount deposited in a year. It’s a straightforward process that offers substantial tax benefits and the potential for good returns over time.
Overview of Public Provident Fund Interest rate
| PPF Interest Rate | 7.1% (Q1 FY 2025-26) |
|---|---|
|
Minimum Investment Amount |
₹500 |
|
Maximum Investment Amount |
₹1.5 Lakh P.A. |
|
Tenure |
15 Years (Can be extendable in 5 year blocks) |
|
Tax Benefit |
Upto ₹1.5 lakh under Section 80C |
Key features of PPF Account
- Investment Limits: You need to invest a minimum of ₹500 and can invest up to ₹1.5 lakh per financial year.
- Tenure: Minimum tenure is 15 years extendable in sets of 5 years.
- Deposit Frequency: You can deposit funds as a lump sum once a year or in 12 installments at most.
- Opening Balance: You can open an account with ₹100 but investments exceeding ₹1.5 lakh annually won't earn interest.
- Nomination: You can nominate someone for your account when opening it or later.
- Mode of Deposit: You can deposit funds via cheque, cash, demand draft or online transfer.
- Risk Factor: PPF is backed by the Indian government making it risk free with guaranteed returns.
- Joint Accounts: Only one individual can hold a PPF account.
- Loan against PPF: You can take a loan against your PPF during the third and sixth years, up to 25% of the total amount. The maximum loan tenure is 3 years. Repaying the first loan allows you to take a second one before the sixth year.
- Interest Rate: Currently, the interest rate is 7.1% compounded annually. Interest is paid on 31 March with the rate set by the Finance Ministry.
Public Provident Fund Interest Rate 2025
PPF interest rate is reviewed and updated every quarter by the Government of India. The table below shows how the PPF interest rate has changed over time. It highlights PPF interest rate has gone down by about 1% in the last 10 years.
| Financial Year | Interest Rate (%) |
|---|---|
|
Apr 2025 - June 2025 |
7.10%
|
|
Apr 2024 - Mar 2025 |
7.10%
|
|
Jan 2024 - Mar 2024 |
7.10%
|
|
July 2023 - Sep 2023 |
7.10%
|
|
Apr 2023 - June 2023 |
7.10%
|
|
Apr 2022 - Mar 2023 |
7.10%
|
|
Apr 2021 - Mar 2022 |
7.10%
|
|
April 2020 - Mar 2021 |
7.10%
|
|
July 2019 - Mar 2020 |
7.90%
|
|
April 2019 - Jun 2019 |
8.00%
|
|
Oct 2018 - Mar 2019 |
8.00%
|
|
April 2018 - Sep 2018 |
8.0%
|
|
Jan 2018 - Mar 2018 |
7.60%
|
|
Jul 2017 - Dec 2017 |
7.80%
|
|
Apr 2017 - Jun 2017 |
7.90%
|
|
Oct 2016 - Mar 2016 |
8.00%
|
|
Apr 2016 - Sep 2016 |
8.10% |
|
Apr 2015 - Mar 2016 |
8.10% |
|
Apr 2014 - Mar 2015 |
8.10% |
|
Apr 2013 - Mar 2014 |
8.10% |
How PPF Interest Rate Compounded?
PPF interest rate follows the rule of annual compounding. This means the PPF interest you earn gets added to your balance at the end of each financial year. From the next year, you start earning interest not only on your deposit but also on the previous interest, helping your money grow faster over the long term.
For example, PPF interest rate for the first quarter of FY 2025-26 (April–June 2025) is 7.1% per year, this rate can change every quarter, depending on government updates.
How to calculate PPF Interest Rate?
To calculate PPF interest rate, you can use the formula F = P * {[((1+i)^n)-1]/i}, where
- F – is the maturity proceeds
- P – is the annual installment
- n -is the number of years
- i – is the interest rate/100
This formula helps determine the total amount you’ll receive at maturity based on your annual deposits and the interest rate over the years.
Benefits of PPF Scheme
- PPF interest rates outperform regular savings accounts and are a bit higher than fixed deposit rates.
- Under Section 80C, you can deduct up to ₹1.5 lakh for the principal amount invested. Additionally, the interest earned and the maturity value are tax free, making the entire fund exempt from taxes.
- PPF investments are government backed and regulated offering a safer option compared to alternatives like savings accounts, FDs and ELSS.
- After two years, a PPF account permits loans. From the third year onwards you can withdraw up to 25% of the previous year's balance. Secure credit is accessible from the third to the sixth year. Loans must be repaid within 36 months with a 1% interest rate. Partial withdrawals are allowed starting from the 7th year.
- Guardians can open PPF accounts for juvenile or mentally ill children, providing a secure option for their future.
- In case of insolvency, the balance in a PPF account isn't considered part of the investor's liabilities making it a last resort option to ensure future stability for the lender.
How to Open a PPF account?
Opening a PPF account has become more accessible with options at both banks and post offices including private banks like Axis, HDFC and ICICI, etc.
To open one, you’ll need to submit an application form along with ID proof ( Aadhaar or PAN card), address proof and signature proof.
Once you’ve submitted required documents and deposited the required amount, you can activate your PPF account either offline or online depending on eligibility criteria.
For online activation, visit your chosen bank or post office’s website and follow the instructions. During activation you’ll need to provide KYC documents like
-
- Aadhaar or Voter ID
- PAN card
- proof of residential address
- A nominee declaration form
- A passport sized photograph
How to Open a PPF Account Online?
To open a PPF account through net banking:
-
- Visit your bank’s online banking platform.
- Find the option to open a PPF account.
- Choose between a self or minor account.
- Fill in necessary details like nominee and bank information.
- Verify your details including PAN.
- Deposit the desired amount into your PPF account.
- Set up standing instructions for future deposits.
- Verify with an OTP sent to your mobile.
- Your PPF account is now open.
- Save the account number for reference.
Some banks may require you to submit hard copies with KYC details but the general process remains similar across banks.
Steps to open a PPF account at a post office
Follow these steps to open a PPF account at the Post Office.
-
- Get the application form from the nearest branch.
- Fill it out completely.
- Submit the form along with KYC documents and a passport sized photo.
- Make the required deposit to activate the account.
- Deposits can range from ₹500 to ₹1.5 lakh per year.
- Once opened you’ll receive a PPF account passbook.
Eligibility to Open a PPF Account
- PPF accounts are only available to Indian residents.
- Non resident Indians (NRIs) aren't eligible.
- However, if a resident Indian becomes an NRI after opening an account, they can continue it until maturity.
- Parents or legal guardians can open PPF accounts for their minor children.
- Joint accounts and multiple accounts are not permitted under PPF rules.
PPF amount withdrawal
You can withdraw the entire balance of your PPF account only after it completes 15 years. At that point, you can take out all the money along with the interest earned. However, if you need money before that you can make partial withdrawals starting from the 6th year. You can withdraw up to 50% of the balance at the end of the 4th year but only once per financial year.
Procedure for withdrawal from PPF
To withdraw from your PPF account:
- Obtain the withdrawal application form (Form 3/Form C) from your bank or post office.
- Complete the form with the necessary details.
- Submit the form to the branch where your PPF account is held.
PPF Withdrawal Form
To withdraw from a PPF account you need to fill out Form 3 or Form C which has three sections:
- Declaration: Provide your PPF account number, proposed withdrawal amount and years since the account opening.
- Office use:Includes details like account opening date, current balance, previous withdrawal date, available withdrawal amount, sanctioned amount and signature of the service manager.
- Bank details:Provide bank information for direct transfer or cheque issuance. Include a copy of the PPF passbook with the application.
Process of transfer of a PPF account
To transfer your PPF account:
-
- Visit your current bank or post office branch.
- Ask for the PPF account transfer form and fill it out.
- Submit the form along with required documents like ID proof and passbook.
- Your current branch will send your application and necessary documents to the new branch.
- At the new branch, fill out a new PPF account opening form and provide your old passbook.
- Once processed, your PPF account will be successfully transferred to the new branch.
How to activate an inactive PPF account?
To reactivate an inactive PPF account:
-
- Write a letter to your bank or post office requesting reactivation.
- Pay a minimum of ₹500 for each year missed, plus a ₹50 penalty per inactive year.
- The bank or post office will then reactivate your account.
PPF Nomination Process
You can nominate one or more people for your PPF account, specifying the percentage share for each if there are multiple nominees. However, nominations aren’t allowed for minor accounts. Family members, relatives, or friends can be nominated. To add a nominee, submit Form E anytime during your account tenure. Changes or cancellations can be made using an Application for Change of Nomination. The form must be signed by you and two witnesses and then submitted to the bank or post office branch.
Final Words
Investors today have many ways to save or invest with low risk, and PPF is one of the most trusted options. It offers guaranteed returns, tax benefits and even the option of taking a loan against your balance. Because of its safety, PPF has long been a popular choice for risk-averse investors.
PPF interest rate has been falling in recent years. So, while PPF remains a safe bet, it’s also worth exploring other similar investment options that may offer better returns.
FAQs on PPF Interest Rate
Is PPF interest rate fixed for 5 years?
No, PPF interest rate is not fixed for 5 years. It is reviewed and updated by the Government of India every quarter.
What is the PPF rate of interest now?
Currently, PPF interest rate is 7.1% per annum for April–June 2025. This rate is subject to change every quarter based on government update.
Will PPF interest rate increase in 2025?
No, an increase is not expected in 2025. The government has kept it at 7.1% for April–June 2025, and near-term revision seems unlikely.
How much to invest in PPF?
You can invest a minimum of ₹500 and up to ₹1.5 lakh annually in PPF. Investments can be made in lump sum or through installments during the year.
Which banks provide PPF account facilities?
Almost all major public and private banks, including SBI, HDFC Bank, ICICI Bank, and PNB, offer PPF account facilities. You can also open accounts at post offices.
