Question 1

What is Public Provident Fund (PPF)?

Accepted Answer

PPF is a government-backed long-term savings scheme with a 15-year lock-in period offering guaranteed returns and complete tax benefits. Established in 1968, it's one of India's most popular tax-saving investments with EEE (Exempt-Exempt-Exempt) status - contributions qualify for tax deduction under 80C, interest earned is tax-free, and maturity proceeds are completely tax-free.

Question 2

What is the current PPF interest rate for 2025-26?

Accepted Answer

The PPF interest rate for FY 2025-26 is 7.1% p.a. (effective from January 2025). This rate is reviewed quarterly by the Government of India and is currently at its lowest historically. Despite lower rates, PPF remains attractive due to its tax-free returns and sovereign guarantee. For comparison, the EPF rate is 8.25% but only for contributions above ₹2,500/month in mandatory EPF.

Question 3

How is PPF interest calculated?

Accepted Answer

PPF uses annual compound interest calculated on the lowest balance between the 5th and last day of each month. Interest is credited to your account at the end of each financial year. For example, if you invest ₹1 lakh on April 1st, you get full year interest. If you invest on April 30th, you only get interest for 1 month. The formula: Interest = (Lowest balance between 5th-30th of month) × (Rate/12) for each month, summed annually.

Question 4

Can I extend my PPF account after 15 years?

Accepted Answer

Yes, you can extend your PPF account in blocks of 5 years after maturity. You can make partial withdrawals (up to 60% of the balance at the time of extension) and continue investing. Extended accounts continue to earn interest at the prevailing rate. This is beneficial if you want to keep the tax-free returns flowing. You can extend multiple times - there's no limit on extensions.

Question 5

What is the maximum and minimum PPF contribution limit?

Accepted Answer

Minimum: ₹500 per financial year (can be invested in single or multiple installments). Maximum: ₹1.5 lakhs per financial year (investments above this don't earn interest). You can make unlimited transactions in a year, but only contributions up to ₹1.5 lakh qualify for 80C tax deduction. Even NRIs can open PPF accounts (but cannot extend after maturity).

Question 6

Is PPF better than FD or EPF?

Accepted Answer

PPF vs FD: PPF wins on tax benefits (EEE vs taxable) and rates (7.1% tax-free vs ~7% taxable = ~5.25% post-tax). PPF loses on liquidity (15-year lock-in vs 7-day FD). PPF vs EPF: EPF has higher rates (8.25%) but only for salary above ₹15,000. EPF is mandatory, PPF is voluntary. For tax-free returns, PPF remains excellent despite lower rates.

Question 7

Can I take loan against my PPF account?

Accepted Answer

Yes, you can take a loan against your PPF balance between years 3-6. Loan amount is limited to 25% of the balance at the end of the 2nd preceding year. For example, in year 4, you can borrow against year 2 balance. Interest rate on PPF loan is 1% above the PPF rate (currently 8.1%). Partial withdrawals are allowed from year 7 onwards (up to 50% of balance at end of 4th year).

Question 8

What happens to PPF if the account holder dies?

Accepted Answer

On death of the account holder (before maturity), the balance is paid to the legal heir/nominee tax-free. If the nominee is a non-resident, tax implications may vary. If the deceased had self-contributed (not from EPF), the nominee gets the balance. Life Insurance can be claimed if the PPF was linked. The account is closed and not inherited.

Tax Aspect	Benefit	Status
Section 80C	Up to ₹1.5 lakh deduction on contributions	Exempt
Interest Income	Annual interest completely tax-free	Exempt
Maturity Amount	Entire corpus paid tax-free on maturity	Exempt
TDS	No TDS deducted on interest or maturity	Exempt

PPF Calculator

EEE Tax Status

15-Year Lock-in

Sovereign Guarantee

Flexible Investment

Nomination Facility

Loan & Withdrawal

Frequently Asked Questions