Public Provident Fund (PPF) Rules, Interest & Tax Benefits (FY 2026-27)
The Public Provident Fund (PPF) is a 15-year statutory savings scheme backed by the Government of India that currently offers a 7.10% annual interest rate compounded annually with sovereign security. PPF carries coveted Exempt-Exempt-Exempt (EEE) tax status, meaning contributions (up to ₹1.5 Lakh under the Old Regime), accrued interest, and maturity proceeds are 100% tax-free.
To maximize interest earnings, depositors should deposit funds on or before the 5th of every calendar month, because interest is calculated on the lowest balance between the close of the 5th day and the end of the month.
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Key PPF Operational Rules at a Glance
| Feature | Statutory Rule / Specification |
|---|---|
| Current Interest Rate | 7.10% per annum (Compounded Annually) |
| Minimum Annual Deposit | ₹500 per financial year |
| Maximum Annual Deposit | ₹1,50,000 per financial year (across self and minor accounts) |
| Lock-in Period | 15 Full Financial Years (excluding year of opening) |
| Extension Facility | In blocks of 5 years indefinitely, with or without fresh contributions |
| Tax Status | EEE (Exempt-Exempt-Exempt) |
| Loan Facility | Available from 3rd to 6th financial year |
| Partial Withdrawal | Allowed from 7th financial year onwards (up to 50% of balance) |
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The Critical "5th of the Month" Rule Explained
Under the Public Provident Fund Scheme Rules:
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Worked Example: Investing ₹1.5 Lakh Annually for 15 Years
If an investor deposits the maximum allowable limit of ₹1,50,000 before April 5th every year at a constant 7.10% interest rate:
By extending the account for two additional 5-year blocks (25 years total), the maturity corpus compounds to over ₹1.03 Crore completely tax-free.
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Frequently Asked Questions
Can an NRI open a PPF account?
Non-Resident Indians (NRIs) cannot open new PPF accounts. However, if a resident opened a PPF account prior to becoming an NRI, they may continue contributing until maturity on a non-repatriable basis, but cannot extend the account for 5-year blocks thereafter.Can a PPF account be attached by a court order?
No. Under Section 15 of the Government Savings Promotion Act, a PPF account balance cannot be attached by any decree or order of any court in respect of any debt or liability incurred by the account holder.⚡ Try the Interactive Tool
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