PPF Interest Rate 2020-21

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PPF, or Public Provident Fund, is a government-run savings programme designed at helping small depositors grow their money over time. It is one of the most popular choices for people who want to earn assured returns on their investments while avoiding market risk. It's best for small savers who want to put a portion of their money into a PPF account regularly and build up a corpus over time.
When compared to other government-backed fixed-income products like National Savings Certificates (NSC), Post Office Time Deposits, and so on, PPF offers some of the highest interest rates. PPF rates have traditionally been higher than bank-offered Fixed Deposit rates to encourage Indian households to save for their long-term future.
The government sets the PPF interest rate every quarter. The current interest rate for PPF accounts has been set at 7.1% for (July-September) FY 2021-22. The ppf interest rate 2020-21 was the same 7.1%. It was 7.90% for the financial year 2019-20.

Benefits of Having a PPF account

The following are some of the most significant benefits of owning a PPF account as an Indian citizen:
The amount you deposit in their PPF account is deductible under Section 80C of the Income Tax Act if you put up to Rs. 1 lakh every year. Contributions to the PPF accounts of the assessee's spouse and/or children are likewise tax-deductible under Section 80C.
The money in a PPF account cannot be used to pay off debts or liabilities. The money in a PPF account belongs to the account holder for the rest of his or her life and is due to the account holder's nominee(s) after his or her death.

Every month, the returns on the PPF balance are computed using the current interest rate for the quarter. The whole interest generated in a financial year, on the other hand, is only credited to the PPF account at the end of the year.
It should be remembered that from the 5th to the final day of each month, PPF interest is paid on the lowest balance in the account. For example, if your PPF account balance is Rs. 20,000 on April 1, 2021, and you deposit Rs. 40,000 on April 8, 2021, your April interest will be calculated on Rs. 20,000 instead of Rs. 60,000. However, if you deposit the same money on April 4, 2021, you will get Rs. 60,000 in interest.
PPF is also compounded annually, which means that the interest earned on the previous year's accumulated PPF balance will be added to your principal amount, earning interest in the current year.
Annual compounding can be tremendously helpful for a long-term investment. You can extend the PPF with or without contributions even after it has reached maturity. Because of annual compounding, if you choose to extend your PPF for another 5 years without making any more contributions, the additional returns can be substantial.

Parents/legal guardians can also open PPF accounts on behalf of their minor children. However, the maximum contribution that can be made in a financial year (to the account of both the child and the adult) is Rs 1.5 lakh.
A father, for example, cannot put Rs 1.5 lakh in his own account and another Rs 1.5 lakh in his daughter's account, but he or she can put Rs 90,000 in his or her own PPF account and Rs 60,000 in his or her child's account. Minors' PPF accounts will earn the same rate of interest as adult PPF accounts. It should be noted that nominations for a minor's PPF account are not permitted.

PPF accounts have a 15-year minimum lock-in period from the date of opening. Account holders have two options when their PPF account matures after 15 years:
They have the option to withdraw the entire balance in their PPF account.
They can keep their PPF account open for another five years. They will be able to continue contributing and earning interest on their overall PPF balance as a result of this. However, the application for extension must be submitted within one year of the PPF account's maturity date. PPF account extensions come in 5-year blocks, however, there is no limit to how many extensions you can get.
When a PPF account reaches maturity and the account holder does not take any action for a year, the account is automatically renewed as default, generating interest. In this circumstance, however, no further payments to the PPF account are permitted.

As a subscriber, you can deposit any amount in the PPF programme in a financial year, ranging from Rs.500 to Rs.1.5 lakh.

From the 7th financial year forward, you can only take money from the PPF scheme once a year.

Yes, you can deduct the money you put into the PPF scheme under Section 80C of the Internal Revenue Code.

Yes, you can use the PPF scheme to get a loan from the third financial year to the sixth financial year.

No, you won't have to pay taxes on the interest you earn. Section 10 (15) of the Income Tax Act exempts all interest earned totally.