PPF Interest Rate 2025: How To Invest In Public Provident Fund, Check Eligibility, Benefits Here

Last Updated:January 06, 2025, 18:46 IST

PPF offers a sovereign guarantee, making it an attractive choice for risk-averse investors.

PPF Calculator: The Public Provident Fund (PPF) is a popular fixed-income savings scheme in India, backed by the government. It offers a safe and reliable way to accumulate wealth over the long term. PPF comes under the umbrella of small savings schemes, with interest rates reviewed quarterly.

Unlike some fixed-income instruments, which offer either market-linked or fixed returns, PPF offers a sovereign guarantee, making it an attractive choice for risk-averse investors.

Key Features of PPF

Investment Limits:

You can start investing with as little as Rs 500 per year and go up to Rs 1.5 lakh per year in your PPF account.

Tenure:

PPF has a 15-year lock-in period. After maturity, you can extend the account in blocks of 5 years, indefinitely, by submitting an extension form. This makes it a flexible long-term option for wealth accumulation.

Tax Benefits:

PPF follows the Exempt-Exempt-Exempt (EEE) tax regime. This means:

• No tax on the principal invested.
• No tax on interest earned.
• No tax on the maturity amount or withdrawals.
• It’s one of the few investment options in India that is entirely tax-free.

Eligibility:

• A resident Indian adult can open a PPF account.
• Guardians can open accounts on behalf of minors or individuals of unsound minds.

PPF Interest Rate 2025 January

The current interest rate is 7.1% per annum (as of the latest review). Interest is compounded annually and credited to the account at the end of each financial year. Rates are subject to quarterly revisions by the government.

How to Withdraw PPF Money?

Premature Withdrawals:

You can withdraw prematurely after 5 years (excluding the year of account opening).

Withdrawal limit: 50% of the balance at the end of the 4th preceding year or the preceding year, whichever is lower. Only one premature withdrawal is allowed per financial year.

Maturity Withdrawal:

After 15 years, you have the following options:

(a) Full withdrawal: Close the account by submitting the closure form and passbook at the post office/bank.

(b) Retain balance without further deposits: The account will continue earning interest, and you can withdraw as needed.

(c) Extend the account: Submit a prescribed form within one year of maturity to extend the tenure in 5-year blocks, with or without additional deposits.

How to Invest in PPF?

Open an Account:

You can open a PPF account at any post office or authorised bank branch. Online account opening is also available with some banks.

Deposit Money:

• Deposits can be made monthly, quarterly, or as a lump sum (within the Rs 500–Rs 1.5 lakh annual limit).
• Payments can be made via cash, cheque, demand draft, or online transfer.

Plan Your Contributions:

To maximise returns, invest early in the financial year to benefit from full-year interest. Regular contributions also ensure disciplined savings.

PPF Calculator

Let’s break down a PPF Calculator example to understand how much you can accumulate over the years by investing in a PPF account.

Assumptions:

• Annual investment: Rs 1,50,000 (maximum limit).
• Interest rate: 7.1% (compounded annually).
• Tenure: 15 years (lock-in period).

The formula for PPF Calculation:

PPF uses compound interest:

A = P × (1 + r/n)^(nt)

Where:

A = Maturity amount

P = Annual deposit

r = Annual interest rate (as a decimal, i.e., 7.1% = 0.071)

n = Number of times interest is compounded in a year (n = 1 for PPF)

t = Number of years

Final Maturity Amount After 15 Years:

Using the formula and assuming Rs 1,50,000 is deposited annually at 7.1% interest:

• Maturity Amount (A) ≈ Rs 40,68,209
• Total Investment: Rs 22,50,000 (Rs 1,50,000 × 15 years)
• Total Interest Earned: Rs 18,18,209

Monitor and Manage:

Track your PPF account balance and maturity timeline via online banking or passbook updates.

PPF is ideal for individuals seeking a secure, tax-efficient, long-term investment option, with flexibility for retirement planning or wealth creation.