How PPF works
The Public Provident Fund is a government savings scheme with a 15-year term, extendable in blocks of 5 years. You deposit ₹500 to ₹1.5 lakh a year; interest is compounded yearly and set by the government each quarter — 7.1% for October–December 2026. Interest and maturity are tax-free.
Example
₹1,50,000 deposited by 5 April every year for 15 years at 7.1% grows to about ₹40.7 lakh — ₹22.5 lakh of deposits and about ₹18.2 lakh of interest. Extended to 25 years, it grows to about ₹1.03 crore.
Tips
- Deposit before the 5th of the month (ideally by 5 April) — interest for a month is worked out on the lowest balance between the 5th and the month's end.
- Partial withdrawals are allowed from the 7th financial year, and loans against the balance in the earlier years, on conditions.
- The deduction for PPF deposits applies only under the old tax regime; the tax-free interest applies under both.
Compare with other options in our investment guides.