🏦 PPF Calc India

Interest Rate

The PPF interest rate is the annual rate at which your PPF balance earns returns, currently set at 7.1% per annum and revised quarterly by the Government of India based on government bond yields.

Detailed Explanation

## How PPF Interest Rate Works The PPF interest rate is set by the Government of India and reviewed every quarter (January, April, July, October). Since April 2020, the rate has been steady at 7.1% per annum, compounded annually. ## How the Rate Is Determined Since 2016, small savings rates (including PPF) are linked to government bond yields. The PPF rate formula is: PPF rate = Average yield on 10-year government securities + 0.25% spread In practice, the government doesn't always follow this formula strictly. There have been instances where the calculated rate would have been lower, but the government maintained the existing rate for political or social reasons. ## Interest Calculation Method PPF interest is calculated monthly but credited annually (on March 31st). The monthly calculation uses the minimum balance between the 5th and the last day of each month. **Example for April:** - Balance on April 5th: Rs 3,00,000 - Deposit on April 20th: Rs 50,000 - Balance on April 30th: Rs 3,50,000 - Interest calculated on: Rs 3,00,000 (the lower of balances between 5th and 30th) - Monthly interest: Rs 3,00,000 x 7.1% / 12 = Rs 1,775 ## Historical Rate Trends PPF rates have ranged from 4.8% (1968) to 12% (1999-2000). The general trend has been downward over the last two decades as India's bond yields have fallen with declining inflation. The current 7.1% rate has been the longest stable period in PPF's history. ## Impact of Rate Changes Since rates can change quarterly, your actual maturity amount might differ slightly from a projection that assumes a constant rate. However, rate changes are typically small (0.1-0.2% at a time), so the impact is modest. Model different rate scenarios with our [PPF calculator](/) to understand the range of possible outcomes.

See it in practice

Use our free PPF Calculator to see how interest rate affects your investment returns.

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Related Terms

PPF

Public Provident Fund (PPF) is a long-term savings scheme backed by the Government of India that offers tax-free returns at 7.1% per annum with a 15-year lock-in period.

EEE Status

EEE (Exempt-Exempt-Exempt) status means an investment is tax-free at all three stages: when you invest, while it earns returns, and when you withdraw at maturity.

Section 80C

Section 80C of the Income Tax Act allows Indian taxpayers to claim a deduction of up to Rs 1,50,000 per year from their taxable income by investing in specified instruments like PPF, ELSS, and tax-saver FDs.

Compound Interest

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods, causing your money to grow exponentially over time.

Maturity Amount

The maturity amount is the total sum you receive when a PPF account completes its full tenure, including all your deposits plus accumulated compound interest.

Lock-in Period

The lock-in period is the minimum time you must keep your investment before you can withdraw. PPF has a 15-year lock-in, though partial withdrawals are allowed from year 7.

Partial Withdrawal

Partial withdrawal from PPF is allowed from the 7th financial year onwards, with the maximum amount being 50% of the balance from 4 years prior or the preceding year's balance, whichever is lower.

Loan Against PPF

PPF account holders can take a loan against their PPF balance from the 3rd to 6th financial year, borrowing up to 25% of the balance from two years prior at an interest rate of PPF rate plus 1%.

PPF Extension

After the 15-year maturity, a PPF account can be extended in 5-year blocks either with continued contributions or without, allowing the corpus to keep earning tax-free interest.

Tax-Free Returns

Tax-free returns mean the gains from an investment are not subject to income tax, allowing you to keep the full amount earned without any deductions for taxes.

Risk-Free Investment

A risk-free investment is one where your principal and returns are guaranteed, typically backed by a sovereign government. PPF is considered risk-free because it carries a Government of India guarantee.

PPF Account

A PPF account is a savings account opened under the Public Provident Fund scheme at designated banks or post offices, where deposits earn 7.1% annual interest with tax benefits under Section 80C.

Annual Deposit

The annual deposit in PPF refers to the total amount contributed to a PPF account in a financial year, with a minimum of Rs 500 and a maximum of Rs 1,50,000.

Sovereign Guarantee

A sovereign guarantee means the Government of India stands behind the PPF scheme, ensuring that both your principal and accumulated interest are fully protected regardless of economic conditions.