PPF pays 7.10% a year, tax-free, with a 15-year lock-in and a cap of ₹1,50,000 a year. That rate is set by the Ministry of Finance every quarter. It applies to the July to September 2026 quarter. State Bank of India’s own PPF page says the 7.10% rate has been effective since 1 April 2020. So the headline has not moved in over six years, while other small savings schemes now pay 8.20%. PPF is still worth holding. It is no longer the best-paying thing at the post office.
What are the PPF rules and limits?
| Rule or limit | Figure | Applies to | Source |
|---|---|---|---|
| Interest rate | 7.10% a year | All accounts, reset quarterly | Ministry of Finance quarterly notification; SBI published page |
| Minimum deposit | ₹500 a year | Keeping the account active | SBI published PPF page |
| Maximum deposit | ₹1,50,000 a year | Per person, all accounts combined | SBI published PPF page |
| Tenure | 15 years | Original term | SBI published PPF page |
| Extension | Blocks of 5 years | On application after maturity | SBI published PPF page |
| Loan against balance | Between the 3rd and 6th year | Account holder | ICICI Bank published PPF page |
| Partial withdrawal | After 5 full financial years | Account holder | ICICI Bank published PPF page |
| Interest calculation | Lowest balance between the 5th and month end | Every month; credited 31 March | SBI published PPF page |
| Tax on interest | Fully exempt | All account holders | SBI published PPF page |
| Deduction on deposits | Section 80C | Old regime only | Section 80C, Income-tax Act |
Figures as of 1 July 2026 for the rate, and as published by the banks named. Verify the rate for the current quarter before you plan around it.
Is PPF still worth it in 2026?
It depends on your tax regime, and most pages skip that.
PPF is described as EEE. Deposits are deductible, interest is exempt, and maturity is exempt. But the first E is a section 80C deduction. Section 80C exists only in the old tax regime. The new regime is the default and does not allow it. If you are on the new regime, PPF gives you two exemptions, not three.
That changes the comparison. Without the deduction, PPF is simply a 7.10% tax-free instrument with a 15-year lock. That is still a good after-tax return for someone in the 30% bracket. A taxable deposit would need to pay over 10% to match it. For someone in the 5% bracket, the case is much weaker. Work out your own position on the old versus new regime page before you commit money for 15 years.
Why is PPF paying less than other post office schemes?
Because the government sets each rate separately, and PPF has been left behind. Sukanya Samriddhi and the Senior Citizen Savings Scheme both pay 8.20% for the July to September 2026 quarter. The National Savings Certificate pays 7.70%. PPF pays 7.10%.
Only Sukanya Samriddhi matches PPF on tax treatment, and it needs a daughter under 10. SCSS and NSC pay more but their interest is taxable. So the ranking flips with your bracket. In the 30% bracket, PPF’s 7.10% tax-free beats NSC’s 7.70% taxable comfortably. In the 5% bracket it does not. Compare the full set on our post office schemes page.
When should you deposit into PPF each year?
Before the 5th of the month, and ideally in April.
Interest is calculated on the lowest balance in the account between the 5th day and the last day of each month. Money that lands on the 6th earns nothing for that month. It is credited once a year, on 31 March.
So a single deposit made on 1 April earns twelve months of interest. The same deposit made on 6 April earns eleven. Over 15 years, that habit is worth real money for no extra outlay. If you deposit monthly, set the standing instruction for the 1st. Model the difference on the PPF calculator.
How do you get money out before 15 years?
Three routes exist, and none of them is a full exit.
A loan is available between the third and the sixth year. You borrow against your own balance and pay interest on it. Partial withdrawal opens after five full financial years, subject to a cap linked to your earlier balance. Premature closure is allowed only in narrow cases, such as serious illness or higher education, and it carries an interest penalty.
Treat PPF as illiquid. It is not an emergency fund. Keep that money in a bank account you can reach the same day. PPF is for the goal that is 15 years away.
One stale claim to ignore
Several bank pages, including SBI’s own PPF page, still say the PPF balance is exempt from wealth tax. Wealth tax was abolished in 2015. The statement is harmless but it tells you how old some of this published guidance is. Check the rate and the rules against the current quarter’s notification, not against a bank page that has not been edited in a decade.
Frequently asked questions
Can I invest more than ₹1,50,000 a year in PPF?
No. The ceiling is ₹1,50,000 per financial year across all your PPF accounts combined, including any account you run for a minor child. Deposits above the cap do not earn interest and are returned without interest. Opening a second account in your own name is not permitted.
What happens if I miss the ₹500 minimum in a year?
The account is treated as discontinued. It stops accepting fresh deposits and you cannot take a loan or a withdrawal against it. The balance keeps earning interest. You revive it by paying the arrears for each missed year plus a default fee, so check the current fee with your bank or post office.
Is PPF better than ELSS or a tax-saver FD?
They answer different questions. PPF is a sovereign-backed debt instrument with a 15-year lock and tax-free interest. An ELSS fund carries market risk and locks money for three years. A tax-saver FD locks for five years and its interest is fully taxable. For long-horizon debt money, PPF wins on tax. For growth, it is the wrong tool.
What happens to my PPF account after 15 years?
You can withdraw the whole balance tax-free, or extend in blocks of five years. Extension comes in two forms: with fresh deposits, or without. The second keeps the balance earning the current rate with no further contribution, and withdrawal rules are more generous. Apply within one year of maturity if you want the version with deposits.
Can NRIs open or continue a PPF account?
An NRI cannot open a new PPF account. An account opened while resident can generally run to maturity, but the rules on extension are restrictive. Confirm your position with the bank holding the account before you deposit anything further, because the treatment has changed more than once.
Sources
- State Bank of India, Public Provident Fund scheme page — deposit limits, tenure, interest calculation and tax treatment. sbi.bank.in
- ICICI Bank, PPF page — loan window and partial withdrawal timing. icici.bank.in
- Small savings interest rates for July–September 2026, Ministry of Finance quarterly notification.
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