PPF Explained: Interest, Maturity, Withdrawal and Tax

Last updated: October 2026

The Public Provident Fund (PPF) is a government-backed savings scheme with a 15-year lock-in, guaranteed returns and fully tax-free maturity. It's one of the safest long-term savings options in India.

The basics

• Interest rate: 7.1% a year, compounded annually. The government reviews it every quarter; it has been 7.1% since April 2020.
• Deposit: ₹500 minimum and ₹1,50,000 maximum per financial year.
• Tenure: 15 years, extendable in blocks of 5 years, with or without fresh deposits.
• Tax: EEE. Deposits qualify for the 80C deduction (old regime), and the interest and maturity amount are tax-free.

What ₹1.5 lakh a year grows to

• 15 years (₹22.5 lakh invested) → about ₹40.68 lakh
• 20 years (₹30 lakh invested) → about ₹66.58 lakh
• 25 years (₹37.5 lakh invested) → about ₹1.03 crore

The jump from 15 to 25 years shows how much the extension blocks add, all tax-free.

Getting money out early

• Loan: available from the 3rd to the 5th financial year, up to 25% of the balance at the end of the second preceding year.
• Partial withdrawal: from the 7th financial year, up to 50% of the balance at the end of the 4th preceding year or the previous year, whichever is lower.

A small tip

Interest is calculated on the lowest balance between the 5th and the last day of each month. Depositing before the 5th, ideally before 5 April for a yearly deposit, earns you a little more.