PPF Interest Rate, Limit,Withdrawal & EEE Benefits 2026

PPF Interest Rate, Limit,Withdrawal & EEE Benefits

Part of the Income Tax India 2026: Income Tax India 2026 : A Complete Guide

Vikram opened his PPF account in 2011 with a Rs 1,000 deposit. He kept investing Rs 1.5 lakh every year without fail. In 2026 — 15 years later — his PPF account is worth approximately Rs 40.5 lakh. He has paid zero tax on the interest. The maturity amount is fully tax-free.

Total invested: Rs 22.5 lakh. Total returned: Rs 40.5 lakh. Tax paid on Rs 18 lakh of returns: zero.

That is the PPF story. Safe, guaranteed, government-backed, and completely tax-free from start to finish. No market risk, no TDS, no capital gains. Just compounding at 7.1% per year with EEE tax status.

This guide covers everything about PPF in 2026 — current interest rate, investment limit, withdrawal rules, loan facility, extension options, and a comparison with FD and ELSS.

7.1% PPF interest rate — Q4 FY 2025-26 (Jan-Mar 2026). Unchanged since April 2020.

EEE Exempt-Exempt-Exempt — investment, interest and maturity all tax-free

Rs 1.5L Maximum annual investment limit (old regime 123 deduction)

15 Years Lock-in period. Extension in 5-year blocks after maturity.

PPF Key Features — Complete At-a-Glance Table

Feature	Detail	Source
Current Interest Rate	7.1% per annum, compounded annually. Unchanged since April 1, 2020.	Ministry of Finance Q4 FY 2025-26 notification
Interest Calculation	Calculated monthly on minimum balance between 5th and last day of month. Credited annually on March 31.	indiapost.gov.in PPF scheme rules
Minimum Annual Investment	Rs 500 per year. Account becomes inactive if minimum not deposited.	indiapost.gov.in
Maximum Annual Investment	Rs 1,50,000 per year per individual. Cannot invest more — excess earns no interest and is returned.	indiapost.gov.in
Lock-in Period	15 years from the end of the financial year in which account was opened.	indiapost.gov.in
Extension After Maturity	Can be extended in blocks of 5 years — with or without fresh contributions. Unlimited extensions allowed.	indiapost.gov.in
Tax Status	EEE — Exempt-Exempt-Exempt. 123 deduction on investment (old regime only). Interest fully tax-free. Maturity fully tax-free.	incometaxindia.gov.in
Who Can Open	Any resident Indian individual. One account per person. Minors can have account operated by guardian.	indiapost.gov.in
NRI Status	NRIs cannot open new PPF accounts. Existing accounts can be maintained until maturity — but cannot be extended after maturity.	indiapost.gov.in
Where to Open	Post offices or authorised banks (SBI, PNB, ICICI, HDFC, Axis, Bank of Baroda, etc.).	indiapost.gov.in
Loan Facility	Available from 3rd to 6th financial year. Up to 25% of balance at end of 2 years before loan year.	indiapost.gov.in
Partial Withdrawal	Allowed from 6th financial year onwards (after completing 5 full years). Once per year. Up to 50% of balance at end of 4th year or previous year, whichever is lower.	indiapost.gov.in
Premature Closure	Allowed after 5 years for specified reasons: serious illness, higher education of account holder or minor, change in residential status to NRI.	indiapost.gov.in
Protection from Creditors	PPF balance cannot be attached or claimed by court order or creditors in case of insolvency.	PPF Act, 1968

PPF Interest Rate 2026 — How It is Calculated

The PPF interest rate for Q4 FY 2025-26 (January to March 2026) is 7.1% per annum — unchanged since April 1, 2020. The rate is reviewed and notified by the Ministry of Finance every quarter (April, July, October, January).

Historical context: PPF offered 8% per annum between October 2018 and June 2019. The rate fell to 7.1% from April 2020 and has remained there since. While this is below its historical highs, it remains competitive against tax-adjusted FD returns — because PPF interest is completely tax-free while FD interest is taxable at slab rates.

The 5th of the Month Rule — When to Deposit for Maximum Returns

This is the most important practical tip for PPF investors. Interest is calculated on the minimum balance in your account between the 5th and the last day of each month. This means:

Deposit Date	Effect on Interest	Recommendation
Before April 5 (lump sum for full year)	Full year’s deposit earns interest from April itself — maximum possible interest for the year.	Best for lump sum investors — deposit by April 5 every year
Between 6th and last day of month	That month’s deposit does not earn interest for that month — counts from next month.	Avoid depositing after the 5th of any month
Monthly SIP before 5th	Each month’s deposit earns interest from that month.	For monthly investors — set standing instruction for 1st or 2nd of month

Worked example: If you invest Rs 1.5 lakh on April 3 each year, your first month’s balance earns 7.1% / 12 = 0.5917% interest. Over 15 years, investing on April 3 vs April 7 can make a difference of thousands of rupees in total returns.

Withdrawal and Loan Rules

Facility	Available From	Rules	Limit
Loan Against PPF	3rd financial year (after completing 2 full years)	Second loan only after first is fully repaid. Interest 1% above PPF rate (currently 8.1%) if repaid within 36 months. 6% above PPF rate if not repaid in 36 months.	Up to 25% of balance at end of 2nd preceding year
Partial Withdrawal	6th financial year (after completing 5 full years)	One withdrawal per year. Account must have completed 5 full financial years.	Up to 50% of balance at end of 4th year or end of preceding year — whichever is lower
Premature Closure	After 5 full financial years only	Allowed ONLY for: (a) serious illness of account holder, spouse or dependent children, (b) higher education of account holder or minor, (c) change of residency status to NRI. 1% interest penalty on premature closure.	Full balance after 1% penalty on applicable years
Full Maturity Withdrawal	After 15 full years	Full balance including all accumulated interest. Completely tax-free. Submit Form C at post office or bank.	100% of balance — fully tax-free

Extension option: after 15 years, you can extend your PPF account in 5-year blocks. Two choices at extension: (a) continue with fresh contributions — same rules apply, 123 deduction continues, interest accrues on both old and new deposits; or (b) extend without contributions — no new deposits but existing balance continues earning 7.1% tax-free interest, no lock-in, can withdraw any amount once per year.

Extension without contributions is often the better choice for retirees — the balance keeps compounding tax-free while allowing flexible partial withdrawals.

PPF vs FD vs ELSS — Comparison Table

The three most common tax-saving instruments compared across every factor that matters.

Factor	PPF	Tax Saving FD (5-yr)	ELSS Mutual Fund
Interest / Returns	7.1% p.a. guaranteed	6.5-7.25% p.a. guaranteed (varies by bank)	12-15% CAGR historical (not guaranteed)
Lock-in Period	15 years (partial from year 6)	5 years — no premature withdrawal	3 years — shortest of all 123 options
Tax on Returns	Fully tax-free (EEE)	Interest taxable at slab rate	LTCG 12.5% on gains above Rs 1.25L/yr
Risk	Zero — government guaranteed	Low — DICGC insured up to Rs 5L per bank	High — equity market risk
123 Deduction	Yes — old regime only	Yes — old regime only	Yes — old regime only
Liquidity	Low — partial from year 6 only	None — no withdrawal before 5 years	Moderate — can redeem after 3 years
Who Should Choose	Conservative, long-term savers. Risk-averse investors.	Simplest option. Those who want FD-like certainty for 123.	Young investors with long horizon who can handle volatility.

Important note on comparison: tax-adjusted returns matter more than headline rates. A PPF return of 7.1% is fully tax-free. A bank FD at 7.25% is fully taxable — at 30% bracket, post-tax return is only ~5.07%. This makes PPF effectively better than most FDs on a post-tax basis, despite the similar headline rates.

For ELSS (the higher-return 123 option), read our: Section 123 Deductions 2026: Complete List of All Options

For NPS (complementary to PPF for retirement), read our: NPS Tax Benefit 2026

Frequently Asked Questions

Conclusion

PPF remains one of the best risk-free, tax-free investments available in India. The case for PPF in 2026:

• 7.1% guaranteed return — beats most FD post-tax returns for 20-30% bracket taxpayers
• EEE status — no tax on investment (old regime), interest, or maturity. Compounding is maximised.
• Protection from creditors — cannot be attached by court order. Only major savings instrument with this protection.
• Invest before April 5 — lump sum investment by April 5 earns full year interest from April.

For the full 123options comparison including PPF, ELSS, NSC and others: Section 123 Deductions 2026: Complete List of All Options

For retirement savings combining PPF with NPS: NPS Tax Benefit 2026

Author

CA Ajay Khandelwal is a Chartered Accountant and financial expert with over 21 years of experience in taxation, compliance, and business advisory. As a key expert at AspirixWriters, he provides practical insights on income tax, financial planning, and regulatory matters, helping readers make informed financial decisions.

Author profile CA. Ajay Khandelwal

Disclaimer

This article is for educational and informational purposes only. It is not personal investment or tax advice. PPF interest rates are reviewed quarterly by the Ministry of Finance and may change. All rules and limits mentioned are based on indiapost.gov.in and nsiindia.gov.in as of March 2026. Please verify the current rate and rules before making investment decisions. Consult your Chartered Accountant for personalised tax planning.

References

[1] Public Provident Fund Scheme — Rules, interest calculation, investment limits, withdrawal rules, loan facility, NRI provisions, extension options | indiapost.gov.in — https://www.indiapost.gov.in/Financial/Pages/Content/PPF.aspx

[2] Ministry of Finance — Small Savings Schemes quarterly interest rate notification | PPF rate 7.1% p.a. unchanged Q4 FY 2025-26 (January-March 2026) | nsiindia.gov.in — https://nsiindia.gov.in

[3] Income Tax Department — Section 123 deductions | PPF EEE tax status | Old regime only for 123 on PPF | incometaxindia.gov.in

[4] Public Provident Fund Act, 1968 — Protection of PPF deposits from creditors and court attachments | Government of India — https://www.indiapost.gov.in/Financial/Pages/Content/PPF.aspx

Mutual Funds India 2026: Complete Beginner’s Guide