Public Provident Fund Interest Rates


Public Provident Fund (PPF) was introduced in India in 1968 with the objective to mobilize small savings in the form of investment, coupled with a return on it. It can also be called a savings-cum-tax savings investment vehicle that enables one to build a retirement corpus while saving on annual taxes. Anyone looking for a safe investment option to save taxes and earn guaranteed returns should open a PPF account.

PPF account

Public Provident Fund (PPF) scheme is a long term investment option that offers an attractive rate of interest and returns on the amount invested. The interest earned and the returns are not taxable under Income Tax. One has to open a PPF account under this scheme and the amount deposited during a year will be claimed under section 80C deductions.

How to open a PPF account

A PPF account can be opened with either a Post Office or with any nationalised bank like the State Bank of India or Punjab National Bank, etc. These days, even certain private banks like ICICI, HDFC and Axis Bank among others are authorized to provide this facility. You need to submit the duly filled application form along with the required documents i.e. the KYC documents like identity proof, address proof, and signature proof. Post submitting these documents you can deposit a prescribed amount towards the opening of the account.

What is the interest rate on PPF?

  • The current interest rate is 7.1% p.a. (for the quarter 1 July 2021 to 30 September 2021; continued from the previous quarter) that is compounded annually. The Finance Ministry sets the interest rate every year, which is paid on 31st March. The interest is calculated on the lowest balance between the close of the fifth day and the last day of every month.
  • Further, use our PPF calculator to figure out the returns you can expect on investing a certain amount in a PPF account.

Four essential features of PPF

  • Tenure: The PPF has a minimum tenure of 15 years, which can be extended in blocks of 5 years as per your wish.

  • Investment Limits: PPF allows a minimum investment of Rs 500 and a maximum of Rs 1.5 lakh for each financial year. Investments can be made in a lump sum or a maximum of 12 instalments.

  • Opening Balance: The account can be opened with just Rs 100. Annual investments above Rs 1.5 lakh will not earn interest and will not be eligible for tax savings.

  • Deposit Frequency: Deposits into a PPF account have to be made at least once every year for 15 years.

  • Mode of deposit: The deposit into a PPF account can be made either by way of cash, cheque, Demand Draft or through an online fund transfer.

  • Nomination: A PPF account holder can designate a nominee for his account either at the time of opening the account or subsequently.

  • Joint accounts: A PPF account can be held only in the name of one individual. Opening an account in joint names is not allowed.

  • Risk factor: Since PPF is backed by the Indian government, it offers guaranteed, risk-free returns as well as complete capital protection. The element of risk involved in holding a PPF account is minimal.

Who is eligible to invest in PPF

  • Any Indian citizen can invest in PPF.

  • One citizen can have only one PPF account unless the second account is in the name of a minor.

  • NRIs and HUFs are not eligible to open a PPF account.

  • Loan against PPF

  • You can take a loan against your PPF account between the 3rd and 5th years.

  • The loan amount can be a maximum of 25% of the 2nd year immediately preceding the loan application year.

  • A second loan can be taken before the 6th year if the first loan is repaid fully.

PPF withdrawal

  • As a rule, one can fully withdraw the PPF account balance only upon maturity i.e. after the completion of 15 years. Upon completion of 15 years, the entire amount standing to the credit of an account holder in the PPF account along with the accrued interest can be withdrawn freely and the account can be closed.
  • However, if account holders are in need of funds, and wish to withdraw before 15 years, the scheme permits partial withdrawals from year 7 i.e. on completing 6 years.
  • An account holder can withdraw prematurely, up to a maximum of 50% of the amount that is in the account at the end of the 4th year (preceding the year in which the amount is withdrawn or at the end of the preceding year, whichever is lower). Further, withdrawals can be made only once in a financial year.

What does Form C look like

This form has 3 sections:

  • Section 1. Declaration section where you must provide your PPF account number and the amount of money you propose to withdraw. Along with that, you also need to mention how many years have actually passed since the account was first opened.

  • Section 2. Office use section which comprises of details like:

  • Date when the PPF account was opened.

  • Total balance standing in the PPF account.

  • The date on which the previously requested withdrawal was allowed.

  • Total withdrawal amount available in the account.

  • The amount of money sanctioned for withdrawal.

  • Date and signature of the person in charge – usually the service manager.

  • Section 3. The bank details section asks for the details of the bank where the money is to be credited directly or the bank in whose favour the cheque or the demand draft is to be issued. It is also mandatory to enclose a copy of the PPF passbook along with this application.


PPF is one investment vehicle that falls under the Exempt-Exempt-Exempt (EEE) category. This, in other words, means that all deposits made in the PPF are deductible under Section 80C of the Income Tax Act. Furthermore, the accumulated amount and interest is also exempt from tax at the time of withdrawal. It is important to note that a PPF account cannot be closed before maturity. A PPF account, however, can be transferred from one point of designation to another. But, do remember that a PPF account cannot be closed prematurely. Only in the case of the account holder’s demise can the nominee’s file for the closure of the account.

Questions and Answers

What is the current interest rate on the public provident fund?

The current interest rate on PPF is 7.1%, which is higher than the 6.8% offered on other small savings schemes like the National Savings Certificate (NSC) and 6.7% offered on Post Office 5-year Time Deposit.

How to withdraw money from a PPF account?

Step 1: Fill in Form C with relevant details. You can download this from your bank or Post Office website or at the branch.

Step 2: Submit the form to the bank or Post Office branch where your PPF account is held.

Is the PPF interest rate fixed?

For NSC, KVP, Time deposits, and Senior Citizens Savings Scheme (SCSS), the rate of interest remains fixed for investors until maturity. The interest rate on PPF remains at 7.1 per cent per annum while for the Senior Citizen Savings Scheme, the interest rate is 7.4 per cent per annum.

How to open a PPF account online?

Step 1: Log into your bank account on the internet banking or mobile banking platform.

Step 2: Select the ‘Open a PPF Account’ option.

Step 3: If the account is for self, click on the ‘Self Account’ option. If you are opening the account on behalf of a minor, select the ‘Minor Account’ option.

Step 4: Enter the relevant details in the application form.

Step 5: Key in the total amount you want to deposit in the account per financial year.

Step 6: Submit the application. An OTP will be sent to the registered mobile number. Enter it in the relevant field.

Step 7: Your PPF account will get created in an instant! Your PPF account number will be displayed on the screen. An email will be sent to your registered email address with all the details confirming the same.

Which is better, PPF or FD?

FD is better than PPF because of its more flexible attributes and it is better than RD because it offers higher interest rates. Among RD, FD and PPF the best instrument for investing your money is different for every customer. A PPF has a limit of deposit of Rs. 1.5 lakh per year.

How to close a PPF account?

  • As per the rules governing PPF accounts, you cannot fully withdraw your PPF account balance only after the account completes its tenure of 15 years. Upon completion of the 15-year term, you can access the entire account balance, withdraw it fully, and close the account.
  • Any time before completing the full tenure of the account, you cannot withdraw the entire account balance in any circumstances. However, premature withdrawal of up to 50% of the account balance is allowed after completing 5 years. This is permitted under special circumstances only.

How much will I get in PPF after 15 years?

Now, let us look at how much you need to invest every month to accumulate Rs 1 crore with PPF. At the current 7.1% interest, your PPF account will have a corpus of around Rs 40 lakh after 15 years if you invest Rs 1.5 lakh per year (or Rs 12,500 per month in PPF account.)