What is the minimum and maximum PPF investment per year?

The minimum investment in a PPF account is ₹500 per financial year. If you fail to deposit the minimum in any year, the account becomes inactive and must be revived by paying a penalty of ₹50 per defaulted year along with the arrears. The maximum investment allowed is ₹1,50,000 per financial year, across all PPF accounts you hold or operate (including a minor child's account). Deposits exceeding ₹1.5 lakh do not earn any interest and are returned without interest.

What is the lock-in period for PPF?

A PPF account has a mandatory lock-in period of 15 years, calculated from the end of the financial year in which the account was opened. For example, if you open an account in August 2024 (financial year 2024-25), the account matures on 31 March 2040. After maturity, you can withdraw the full amount, or extend the account in 5-year blocks - with or without making further contributions - while continuing to earn tax-free interest.

What are the tax benefits of investing in PPF?

PPF enjoys the EEE (Exempt-Exempt-Exempt) tax status under the Income Tax Act. First, your annual deposit (up to ₹1.5 lakh) qualifies for tax deduction under Section 80C. Second, the interest credited each year is completely tax-free - it is not included in your taxable income. Third, the full maturity amount, including all accumulated interest, is received tax-free. This triple exemption makes PPF one of the most tax-efficient investments available to Indian residents, especially for individuals in higher tax brackets.

Can I take a loan against my PPF account?

Yes. You can take a loan against your PPF balance from the 3rd financial year (the year after the financial year of account opening) up to the 6th financial year. The loan amount can be up to 25% of the balance at the end of the 2nd year preceding the year in which the loan is applied for. The loan carries an interest rate of 1% above the PPF rate. The loan must be repaid within 36 months; otherwise, the interest rate increases to 6% above the PPF rate. A second loan can be taken only after the first one is fully repaid.

Can I close my PPF account before 15 years?

Premature closure is only permitted after the account completes 5 full financial years, and only under specific conditions: treatment of a life-threatening illness of the account holder, spouse, dependent children, or parents; and higher education expenses of the account holder or a minor child (with supporting documents). On premature closure, the applicable interest rate is reduced by 1% from the rate at which it was credited, serving as a penalty. Full premature closure without any conditions is not allowed before 5 years.

PPF Calculator

What is PPF?

The Public Provident Fund (PPF) is a long-term savings scheme backed by the Government of India, introduced in 1968. It is one of the most popular tax-saving investment options for individuals because it offers guaranteed, risk-free returns along with the highest possible tax exemption - the EEE (Exempt-Exempt-Exempt) status. The scheme is available at any post office and most nationalised banks.

PPF is particularly suitable for individuals who want to build a retirement corpus, save for a child's higher education, or grow wealth steadily over the long term without taking on market risk.

Current PPF Interest Rate

The PPF interest rate is set by the Government of India and announced quarterly. As of 2024, the rate stands at 7.1% per annum, compounded annually. The rate has historically ranged between 7% and 12%. The government reviews rates each quarter based on government securities yields, though the PPF rate has been stable at 7.1% since April 2020.

PPF Calculation Formula

PPF uses year-end compounding. The balance is calculated year by year as:

Balance(Year N) = (Balance(Year N-1) + Annual Deposit) x (1 + r/100)

Where:

r = Annual interest rate (e.g., 7.1)
Annual Deposit = Amount deposited each year
Balance grows year by year for the chosen tenure

The maturity value is the balance at the end of the chosen tenure. The total interest is simply the maturity value minus the total amount deposited over all years.

PPF Investment Rules

Minimum investment: ₹500 per year. An account becomes inactive if the minimum deposit is not maintained.
Maximum investment: ₹1,50,000 per year (across all PPF accounts held, including a minor's account operated by you).
Lock-in period: 15 years from the end of the financial year in which the account was opened. The account can be extended in blocks of 5 years after maturity.
Deposit frequency: You can deposit up to 12 times a year, but the total must not exceed ₹1.5 lakh annually. Deposits made before 5th of the month earn interest for that month.

PPF Tax Benefits - EEE Status

PPF enjoys the rare EEE (Exempt-Exempt-Exempt) tax status, meaning:

Exempt on investment: Deposits up to ₹1.5 lakh per year qualify for deduction under Section 80C of the Income Tax Act.
Exempt on interest: The interest earned each year is completely tax-free. It is not added to your taxable income.
Exempt on maturity: The entire maturity amount (principal + accumulated interest) is tax-free in your hands.

This makes PPF one of the very few instruments where you save tax on the way in, earn tax-free returns, and receive a tax-free payout - making the effective post-tax return significantly higher than comparable fixed-income instruments.

Partial Withdrawal and Loan Against PPF

Partial withdrawals are allowed from the 7th financial year onwards. You can withdraw up to 50% of the balance at the end of the 4th year preceding the year of withdrawal. Only one withdrawal is allowed per financial year.

Loan against PPF is available from the 3rd to the 6th financial year. You can borrow up to 25% of the balance at the end of the 2nd year preceding the loan year. The loan must be repaid within 36 months, and if it remains unpaid, it is adjusted against future withdrawals.

Premature Closure

Premature closure of a PPF account is permitted only after completing 5 financial years from account opening, and only on specific grounds - such as life-threatening illness of the account holder or spouse/children, or for higher education expenses of the account holder or minor child. On premature closure, the interest rate is reduced by 1% as a penalty.

Advantages of PPF

Government guarantee: PPF is backed by the sovereign guarantee of the Government of India. There is zero credit risk.
EEE tax benefit: No other comparable instrument offers tax exemption at all three stages of investment, growth, and withdrawal.
Compounding power: Annual compounding over 15+ years creates significant wealth. Investing the maximum ₹1.5 lakh per year at 7.1% for 15 years yields over ₹40 lakhs.
Creditor protection: The PPF balance cannot be attached or seized by a court order to settle any debt or liability of the account holder.
Extension option: After the mandatory 15-year term, you can extend the account in 5-year blocks, with or without fresh contributions, continuing to earn tax-free interest.