PPF (Public Provident Fund) is a 15-year government-backed savings scheme with tax-free interest, currently 7.1% per year. The maximum deposit is ₹1.5 lakh per year. Both deposits and maturity are tax-exempt under the Exempt-Exempt-Exempt (EEE) category — making PPF one of the most tax-efficient long-term savings products in India.
What is PPF?
PPF was launched in 1968 to give Indians a safe, long-term savings instrument backed by a government guarantee. The 15-year lock-in feels long, but the EEE tax status — exempt at deposit, accumulation, and withdrawal — makes the effective post-tax return higher than almost any other fixed-income option for someone in the 30% tax bracket.
You can open a PPF account at any post office or major bank branch (SBI, HDFC, ICICI, Axis, etc.). You can deposit any amount from ₹500 to ₹1.5 lakh per year, in lump sum or up to 12 installments. The interest rate is reset by the government every quarter — historically it has stayed in a 7-8% range.
PPF is most useful for the long-term, low-risk part of your portfolio. It is not a wealth-multiplier — at 7% post-tax, it just barely beats inflation — but it is a guaranteed, tax-free, retirement-grade asset. Pair it with equity SIPs for the wealth-building part.
How PPF interest accrues
Interest is calculated monthly on the lowest balance between the 5th and the last day of the month, but credited to your account once a year on March 31. The annualised rate for FY 2026 (April-June quarter) is 7.1%. Each year's deposits compound for the remaining tenure.
- P
- Annual deposit—₹500 to ₹1.5 lakh per year
- r
- Annual rate—as decimal — 7.1% = 0.071
- n
- Tenure—15 years (extendable in 5-year blocks)
How to use this calculator
Three sliders to adjust deposit, rate, and tenure.
Set annual deposit
Maximum ₹1.5 lakh. If your goal is just 80C tax saving, ₹1.5 lakh is the right level. For pure wealth building, you may prefer to combine PPF with ELSS.
Set the interest rate
Default 7.1% (FY 2026 Q1). The government revises it quarterly. Historical range is 7%–8.5%.
Set the tenure
Default 15 years. You can extend in 5-year blocks indefinitely after maturity, with or without further contributions.
What PPF is good for
Tax-saving + retirement combination
₹1.5 lakh PPF deposit fully uses 80C and grows tax-free. Over 15-25 years, this becomes a meaningful retirement asset.
Children's long-term goals
Open a PPF in your child's name (with you as guardian) for college or wedding expenses. Tax-free growth for 15-18 years.
Risk-balancing in a portfolio
Investors with a heavy equity allocation use PPF as the safe, debt-equivalent component — better post-tax than FDs or debt funds.
Government employee savings
Government employees with no EPF often default to PPF as their main retirement vehicle outside NPS.
Common mistakes to avoid
Treating PPF as a wealth-multiplier
PPF gives 7-8% post-tax — barely above inflation. For real wealth growth, pair it with equity mutual funds. Use PPF for the safe, tax-efficient base.
Not maxing out ₹1.5 lakh annually
Below ₹1.5 lakh, you are leaving 80C deduction on the table. If you can't deposit ₹1.5L all at once, automate monthly transfers of ₹12,500.
Closing PPF at 15 years
Extending in 5-year blocks (with or without contributions) keeps the EEE benefit going. Many investors run PPF for 30-40 years.
Glossary
- PPF
- Public Provident Fund — government-backed 15-year savings scheme with tax-free interest.
- EEE category
- Exempt-Exempt-Exempt — deposit, accumulation, and withdrawal are all tax-free.
- Section 80C
- Tax provision allowing ₹1.5 lakh deduction for specified investments including PPF.
- Lock-in period
- PPF's 15-year minimum holding. Partial withdrawals allowed after year 7; loans after year 3.
Frequently asked questions
Is PPF really tax-free?
What is the maximum I can deposit per year?
Can I extend PPF beyond 15 years?
When is interest credited?
References
- PPF — Department of Posts— India Post
- Public Provident Fund Scheme — RBI Notification— Reserve Bank of India