The Public Provident Fund (PPF) is one of India's most popular long-term savings instruments — and for good reason. It offers a government-backed interest rate of 7.1% per annum (as of 2026), complete tax exemption at all three stages (deposit, interest, and maturity), and zero risk. Whether you are a salaried employee, self-employed professional, or small business owner, PPF is a cornerstone of smart financial planning in India.
This comprehensive guide explains everything about PPF — how to open an account, deposit rules, partial withdrawal, loan facility, and how it compares with Fixed Deposits and NPS.
What is PPF and Who Can Open an Account?
PPF is a government savings scheme introduced in 1968 under the Public Provident Fund Act. It is managed by the Ministry of Finance and available at all nationalised banks, major private banks, and all post offices across India.
- Any resident Indian individual can open a PPF account.
- You can open an account in your own name or on behalf of a minor child (as guardian).
- NRIs (Non-Resident Indians) cannot open a new PPF account. Existing accounts can be continued till maturity but cannot be extended.
- HUFs (Hindu Undivided Families) are no longer allowed to open PPF accounts.
PPF Deposit Rules and Interest Calculation
Minimum and Maximum Deposit
You must deposit at least ₹500 per financial year to keep the account active. The maximum permissible deposit in a single PPF account is ₹1,50,000 per financial year (April to March). Deposits exceeding ₹1.5 lakh in a year do not earn interest on the excess amount.
How Interest is Calculated
PPF interest is calculated on the minimum balance between the 5th and the last day of each month. This means if you deposit before the 5th of every month, you earn interest for that full month. Deposits made after the 5th earn interest only from the following month. The interest is credited to your account at the end of each financial year (March 31).
The PPF interest rate is set by the government every quarter. It has been steady at 7.1% per annum compounded annually for several quarters. To maximise your PPF corpus, make a lump-sum deposit of ₹1.5 lakh before April 5 each year.
15-Year Lock-In and Extension Rules
PPF has a mandatory 15-year lock-in period. The account matures at the end of the 15th financial year from the year of opening. For example, if you opened the account in FY 2011–12, it matures in FY 2026–27.
After maturity, you have three options:
- Close the account and withdraw the full maturity amount — fully tax-free.
- Extend without contribution for any number of 5-year blocks — the balance continues to earn interest at the prevailing rate.
- Extend with contribution for 5-year blocks — you can continue making fresh deposits and enjoy all the tax benefits.
Partial Withdrawal Rules
Full withdrawal is only allowed after the 15-year maturity. However, partial withdrawals are permitted from the 7th financial year onwards, subject to the following limits:
| From Year | Maximum Withdrawal Allowed | How Many Times |
|---|---|---|
| Year 1–5 | Not allowed | – |
| From Year 7 | 50% of balance at end of 4th year OR 50% of balance at end of preceding year — whichever is lower | Once per financial year |
| After Maturity (extended) | 60% of balance at start of extension block — spread over 5 years | Once per financial year |
PPF Loan Facility
If you need funds urgently and have not yet reached the 7-year mark for partial withdrawal, you can avail a loan against your PPF balance. The loan is available between the 3rd and 6th financial years. The maximum loan amount is 25% of the balance at the end of the 2nd preceding financial year. The loan must be repaid within 36 months. The interest rate charged is 1% above the PPF interest rate.
PPF vs FD vs NPS – Which is Better?
| Feature | PPF | Fixed Deposit (Bank) | NPS (Tier 1) |
|---|---|---|---|
| Interest Rate | 7.1% (govt-set) | 6.5%–7.5% (varies) | 9%–12% (market-linked) |
| Risk | Zero (govt-backed) | Very Low (DICGC insured up to ₹5L) | Moderate (equity exposure) |
| Lock-in | 15 years | Flexible (7 days to 10 years) | Till age 60 |
| Tax on Interest | Fully Tax-Free | Taxable as per slab | Partially tax-free at maturity |
| Section 80C Benefit | Yes (up to ₹1.5L) | Only for 5-year Tax-Saver FD | Yes + extra ₹50,000 (80CCD 1B) |
| Liquidity | Low (partial after 7 years) | High (premature withdrawal with penalty) | Very Low (till 60) |
| Best For | Conservative long-term savers | Short to medium term goals | Retirement planning |
How to Open a PPF Account
At a Bank (Online or Offline)
Most major banks — SBI, HDFC, ICICI, Axis, Bank of Baroda, Canara Bank — allow you to open a PPF account online through Internet banking. You need your Aadhaar, PAN, and a linked savings account. The process takes under 10 minutes online.
At a Post Office
Visit your nearest post office with your KYC documents (Aadhaar, PAN, photo, address proof) and an initial deposit of at least ₹500. The post office will open the account and provide a passbook.