# PPF interest rate 2026: 7.1%, rules, limits and maturity value

> PPF pays 7.1% for Oct–Dec 2026. Deposit ₹500 to ₹1.5 lakh a year for 15 years, tax-free. Maturity table, the 5th-of-month rule, loans, withdrawals and extensions.

- URL: https://2search.in/knowledge/articles/oct-26/ppf-interest-rate-rules
- Genre: Personal finance
- Country: India
- Published: 2026-10-27
- Updated: 2026-10-27
- Publisher: 2search (https://2search.in)

> **Quick answer:** The **PPF interest rate is 7.1% a year** for **October–December 2026 (Q3 FY27)**, unchanged for many quarters. You can deposit **₹500 to ₹1.5 lakh per financial year** for **15 years**. Deposits qualify for the **old-regime 80C deduction** (now section 123), and both **interest and maturity are tax-free** — the "EEE" status. Investing ₹1.5 lakh every year at 7.1% grows to about **₹40.7 lakh** in 15 years.

> **Key takeaways**
> - Rate: **7.1%**, compounded yearly, reviewed every quarter by the government.
> - Deposit **before the 5th** of the month to earn interest for that month.
> - **Tax-free** interest and maturity, even in the new tax regime — only the deduction is old-regime-only.
> - Partial withdrawals from **year 7**; loans in **years 3–6**.
> - After 15 years, extend in **5-year blocks** — with or without new deposits.

PPF is one of India's most trusted long-term savings options: government-backed, tax-free and simple. It isn't the highest-return product, but its safety and tax status make it a solid base for retirement and children's goals. Here's everything you need to know — rates, rules, maturity value, withdrawals, loans and smart tips.



![PPF interest rate 2026: 7.1%, rules, limits and maturity value Breakdown & Visual Guide](/images/articles/ppf-interest-rate-rules/diagram.svg)

## Current PPF interest rate

| Period | PPF rate |
| --- | --- |
| **Oct–Dec 2026 (Q3 FY27)** | **7.1%** |
| Jul–Sep 2026 | 7.1% |
| Apr–Jun 2026 | 7.1% |

The rate is set by the Ministry of Finance every quarter along with other **small savings schemes**. It has stayed at 7.1% since April 2020.

### How it compares (Q3 FY27)

| Scheme | Rate | Lock-in | Tax on interest |
| --- | --- | --- | --- |
| **PPF** | 7.1% | 15 years | **Tax-free** |
| Sukanya Samriddhi Yojana | 8.2% | Till girl turns 21 | Tax-free |
| Senior Citizens' Savings Scheme | 8.2% | 5 years | Taxable |
| NSC | 7.7% | 5 years | Taxable |
| Bank FD (5 years, typical) | ~6–7% | 5 years | Taxable |

For someone in the 30% tax bracket, a **7.1% tax-free** return is like a **~10.1% taxable** return.

## PPF rules at a glance

| Rule | Details |
| --- | --- |
| Who can open | Resident Indian individuals; one account per person (plus one for a minor as guardian) |
| Where | Post office or authorised banks (SBI, HDFC, ICICI, etc.) — many allow online opening |
| Minimum deposit | **₹500 a year** |
| Maximum deposit | **₹1.5 lakh a year** (your account + minor's account combined) |
| Number of deposits | Any number of times in a year, within the limit |
| Tenure | **15 full financial years** after the year of opening |
| Interest | Calculated monthly on the **lowest balance between the 5th and the end of the month**, credited on 31 March |
| NRIs | Can't open a new account; an existing one can run till maturity (no extension) |

## The 5th-of-the-month rule

Interest for each month is calculated on the **lowest balance between the 5th and the last day** of that month. So:

- Deposit **on or before the 5th** → that month earns interest.
- Deposit on the **6th or later** → that month's interest is lost for that deposit.

> **Tip:** If you invest the full ₹1.5 lakh once a year, deposit it **between 1 and 5 April**. You earn interest on it for all 12 months.

## PPF maturity value: what ₹1.5 lakh a year becomes

Assuming 7.1% for the full period and the deposit made by 5 April each year:

| Period | Total deposited | Maturity value (approx.) | Interest earned |
| --- | --- | --- | --- |
| 15 years | ₹22.5 lakh | **₹40.7 lakh** | ₹18.2 lakh |
| 20 years (one extension) | ₹30 lakh | **₹66.6 lakh** | ₹36.6 lakh |
| 25 years (two extensions) | ₹37.5 lakh | **~₹1.03 crore** | ₹65 lakh+ |

The rate can change quarterly, so treat these as estimates. Notice how the extra 10 years more than double the interest — compounding works best at the end. See [compound interest explained](/compound-interest-explained).

## Tax benefits (EEE)

1. **Exempt on deposit:** up to ₹1.5 lakh a year deductible under the old regime (section 80C under the old Act, **section 123** under the Income-tax Act, 2025).
2. **Exempt on interest:** yearly interest is tax-free.
3. **Exempt on maturity:** the full amount is tax-free.

> **Good to know:** Even if you use the **new tax regime**, PPF interest and maturity stay **tax-free**. You only lose the deduction on deposits. See [new vs old tax regime](/new-vs-old-tax-regime-india).

## Partial withdrawals

- Allowed from the **7th financial year** (after 5 full years from the end of the year you opened).
- **Once a year**.
- Up to **50%** of the balance at the end of the 4th year before the withdrawal year, or the end of the previous year — whichever is lower.
- Tax-free.

## Loan against PPF

- Available from the **3rd to the 6th financial year**.
- Up to **25%** of the balance at the end of the second year before the year you apply.
- Interest: **1% above** the PPF rate (currently 8.1%), as long as you repay within **36 months**.
- Only one loan at a time; a second loan only after repaying the first.

## Premature closure

Allowed after **5 years** only for specific reasons:

- Serious illness of the account holder, spouse, children or parents
- Higher education of the account holder or children
- Change in residency status (becoming an NRI)

There's a penalty of **1% lower interest** for the whole period.

## After 15 years: three choices

1. **Close the account** and withdraw everything tax-free.
2. **Extend without deposits** — the balance keeps earning interest; you can withdraw any amount once a year.
3. **Extend with deposits** in 5-year blocks — submit **Form H (Form 4)** within **one year of maturity**. You can withdraw up to 60% of the opening balance of each block over the 5 years.

If you do nothing, the account is **automatically extended without deposits**.

## How to open a PPF account

- **Online:** in your bank's net banking or app (SBI, ICICI, HDFC, Axis and others) — needs your Aadhaar, PAN and a savings account with the bank.
- **Offline:** at a post office or bank branch with **Form A (account opening form)**, KYC documents, a photo and the first deposit.
- Add a **nominee** when opening.

## Common mistakes

- **Depositing after the 5th** and losing a month's interest.
- **Missing the ₹500 minimum** in a year — the account becomes **inactive**. Revive it by paying ₹500 for each missed year plus a ₹50 penalty per year.
- **Exceeding ₹1.5 lakh** across your own and a minor's account — the excess earns no interest.
- **Forgetting to extend with Form H** if you want to keep depositing after 15 years.
- **Opening two PPF accounts** in your own name — the second one is irregular.

> **Tip:** The government reviews small-savings rates every quarter; the January–March 2027 rate is usually announced around 31 December. Meanwhile, compare PPF with equity growth in the [SIP calculator](/tools/sip-calculator).

## Frequently asked questions

### What is the PPF interest rate for October–December 2026?

7.1% per year, compounded annually.

### Is PPF interest taxable?

No. PPF interest and maturity are fully tax-free under both tax regimes.

### Can I deposit more than ₹1.5 lakh in PPF?

No. The excess won't earn interest and won't get a deduction.

### Can I have a PPF account in a bank and a post office?

No. One person can have only one PPF account, though you can transfer it between bank and post office.

### What happens if I miss a year's deposit?

The account becomes inactive. Pay ₹500 for each missed year plus a ₹50 penalty per year to revive it.

### Can an NRI invest in PPF?

An NRI can't open a new account. If you opened it as a resident, you can continue it until maturity but can't extend it.

### Is PPF better than mutual funds?

They do different jobs. PPF gives safe, tax-free fixed returns; equity funds can grow faster over long periods but go up and down. Many people use both. See [SIP vs lump sum](/sip-vs-lump-sum).

## Sources

- [Business Today — Small savings rates unchanged for Q3 FY27](https://www.businesstoday.in/personal-finance/story/small-savings-scheme-interest-rates-unchanged-for-q3-fy27-check-ppf-scss-ssy-rates-558892-2026-09-30)
- [National Savings Institute — PPF scheme rules](https://www.nsiindia.gov.in/)
- [ClearTax — PPF account rules and benefits](https://cleartax.in/s/ppf)