PPF is a 15-year, government-rate, tax-free savings account, and its details reward careful reading: the 5th-of-the-month rule, the yearly cap, the extension blocks, and the withdrawal and loan limits all change the outcome. This guide works through them with the calculator figures.

What PPF is

PPF stands for Public Provident Fund. It is a long-term savings scheme with an interest rate set by the government, a fixed 15-year term, and fully tax-free returns. The account is opened with a bank or a post office, deposits are made over the years, interest is computed month by month and credited once a year, and at maturity the whole balance can be withdrawn tax-free or the account can be extended. Few savings products combine a government-set rate, a sovereign guarantee, and fully tax-free returns in one account, which is why PPF remains the default long-term debt anchor for many Indian savers, even at modest rates.

The term is the first thing to understand, because it shapes every other decision. A PPF account runs for 15 financial years. A financial year in India runs from 1 April to 31 March, so the 15-year count is a count of financial years, not of calendar anniversaries from the opening date. At the end of the 15 years the saver is not forced to withdraw: the account can be extended in blocks of 5 years, with fresh deposits or without them, and the balance keeps earning interest either way. The calculator tenure control models 15 years and extensions up to 50 years, so withdrawing at 15 can be compared directly against one, two, or three extension blocks.

Amounts on this page and on the calculator page are shown in dollars, like the rest of this site. The scheme itself is rupee-denominated, and the dollar figures here are the calculator page figures, carried over unchanged so that the guide and the tool always agree. The underlying limits are the scheme limits: a yearly cap, a yearly minimum, and a rate set by the government, all stated in the sections below exactly as the calculator page states them.

Deposit rules: the cap, the floor, and the 5th of the month

The maximum deposit is $150,000 per financial year, across all PPF accounts combined, and the minimum to keep an account active is $500 a year. Deposits above the cap earn no interest and are not eligible for the tax deduction, so the calculator blocks any amount over the cap with an error message rather than silently modeling money that would earn nothing. The cap is a hard scheme limit, not a recommendation: depositing up to the cap every year is the maximum use of the account, and depositing the minimum keeps it alive in a year when money is tight.

Deposits can be made yearly or monthly. The calculator Advanced options offer a monthly deposit frequency, worked out with the scheme monthly minimum-balance rule, and an opening balance field for money already in the account when a projection starts, which earns interest from the first month. Deposit timing is also offered as a choice: start of year or end of year, because depositing early earns a full year interest. The timing choice is not cosmetic. It is the visible form of the most valuable habit in this whole guide, which is the 5th-of-the-month rule.

Interest is computed month by month on the lowest balance between the close of the 5th and the end of each month, and credited once a year on 31 March. A deposit made on or before the 5th counts for that month interest. A deposit made after the 5th does not count until the following month, and a month of growth is lost. Over 15 years, a habit of depositing late can cost a visible amount, as the worked comparison in the next section shows. The rule rewards one simple behavior: deposit early in the month, every month, and never let a deposit drift past the 5th by accident.

How the interest is really calculated

The monthly rule adds up to a familiar closed form when the deposit is a fixed yearly amount made at the start of the year. With yearly deposit P, rate i, and n years, the maturity value is P times the quantity one plus i raised to the power n, minus one, divided by i, times one plus i. Interest is then the maturity value minus the total invested. The calculator does not shortcut to this formula, however: it runs the monthly minimum-balance rule directly, month by month, so that monthly deposits, opening balances, and deposit timing are all modeled exactly as the scheme computes them. The closed form is the check on the monthly computation for the simple case, and the two agree.

The worked example carried through the calculator page is a yearly deposit of $150,000 at 7.1% for 15 years, which matures to $4,068,209.22 on $2,250,000 invested, with $1,818,209.22 of interest. The same total saved monthly, $12,500 a month paid in by the 5th, matures to $3,944,599.22, because each instalment starts earning from its deposit month rather than from the start of the year. Pay after the 5th instead, and the same monthly habit matures to $3,922,124.68. The gap between the yearly and monthly figures, $123,610.00, is the price of spreading deposits through the year. The gap between depositing by the 5th and depositing late, $22,474.54, is the price of the timing habit alone. Both gaps are worth knowing, because both are within the saver control, unlike the rate.

The table also shows why the balance curve steepens over time, which the calculator chart displays. In the early years most of the balance is deposits, and interest is a small addition each year. In the later years the balance is large, so the same 7.1% produces much larger annual interest, and the interest itself starts earning interest. Compounding is slow to start and hard to stop, which is the argument for opening the account early in life and for extending it at maturity rather than withdrawing and restarting elsewhere.

The interest rate, and its history

The PPF rate is set by the government and revised periodically, usually every quarter. The calculator rate field defaults to 7.1% a year, but it is fully editable, because a long projection built on a rate that later changes is a projection about a past product. Re-run any long projection with the current rate whenever the rate is revised, and treat every multi-decade figure on this page as an estimate at a stated, constant rate. The rate history below is the history published on the calculator page, from the rate history notified by the Ministry of Finance and published by the National Savings Institute, checked in October 2026.

Two lessons sit in that table. The first is that the rate has fallen over the decades, from 12.0% in the late twentieth century to 7.1% since April 2020, which means older projections and older advice built on higher rates cannot be carried forward unchanged. The second is that the rate has been stable for a long stretch: 7.1% has applied since 1 April 2020 and was confirmed unchanged for the October to December 2026 quarter. Stability is useful for planning, but it is not a promise. The government revises the rate, the field on the calculator is editable for exactly that reason, and any saver who treats 7.1% as permanent is making the same mistake as a saver who treats a remembered bank rate as current. Check the current rate, enter it, and re-run.

Maturity and the 5-year extensions

At 15 years the saver faces a genuine choice, and the calculator exists to price it. Withdrawing the full maturity amount tax-free closes the account and ends the compounding. Extending keeps the balance working at the government rate, with the tax-free treatment intact, for another five years, and then another. The extension example on the calculator page is stark: $150,000 a year at 7.1% grows from $4,068,209.22 at 15 years to $6,658,288.17 at 20 years, one extension block with continued deposits. The five extra years add $2,590,078.95 to the maturity value, on $750,000 of extra deposits, which is $1,840,078.95 of extra interest on top of the deposits. Compounding rewards patience, and the extension blocks are where patience is paid.

Extensions come in two forms, and the choice between them matters. Extending with deposits keeps the yearly cap and the tax deduction, so the account continues as a savings vehicle with fresh money going in. Extending without deposits still earns interest on the balance, and partial withdrawal is allowed once per year in that form, so the account becomes a tax-free income and holding vehicle rather than an accumulation vehicle. The tenure dropdown models both, because the calculator cannot know which form the saver wants, and the year-by-year table shows the balance path under either choice. The cap formula for withdrawals differs by stage, which the withdrawal tool on the calculator page computes from the balances entered.

A saver who withdraws at 15 and reinvests elsewhere should compare honestly. The replacement investment must beat a sovereign-guaranteed, tax-free 7.1% after its own tax and risk are counted, which is a higher bar than it looks. A bank deposit paying a similar headline rate pays taxable interest, so its after-tax return is lower. A market investment may return more, but with risk and tax on gains. The extension is the default worth beating, not the option of last resort, and the burden of proof sits with the alternative.

Partial withdrawals and loans against the balance

PPF is a 15-year account, but it is not a locked box. From the 7th year, part of the balance can be withdrawn, and in years 3 to 6 a loan can be taken against it. The limits follow the Public Provident Fund Scheme, 2019, paragraphs 8 to 12, as stated on the calculator page and checked in October 2026. The rules below are general information about the scheme, not advice about any individual account, and the exact limits for an account depend on its own balances and history.

Partial withdrawal is allowed once per financial year, once five years have passed from the end of the year in which the account was opened. Any outstanding loan must be repaid before a withdrawal is made. The cap formula differs by stage: before maturity, in the 7th to 15th year, the cap follows one formula, and in an extension block the cap follows another, with the continued-with-deposits and continued-without-deposits forms treated differently. The withdrawal tool on the calculator page takes the financial years completed, the balance at the end of the 4th preceding year, and the balance at the end of the last year, and computes the limit from them. Count the opening year as year 1 when working out the stage, because the scheme counts financial years completed, not anniversaries.

A loan is available from the 3rd to the 6th financial year, up to 25% of the balance at the end of the 2nd preceding year, with one loan a year and a fresh loan only once the earlier one is repaid in full. The principal must be repaid within 36 months. The loan tool on the calculator page checks the requested amount against the 25% cap and the repayment period against the 36-month limit. A loan is cheaper than a withdrawal in one respect: the money stays in the account structure and the account continues, while a withdrawal removes the balance permanently from compounding. It is more demanding in another: it must be repaid, on schedule, or it blocks later withdrawals. Use the loan for a short, repayable need, and the withdrawal for a need that will not be repaid.

Tax: the EEE advantage

PPF enjoys EEE status: exempt, exempt, exempt. Deposits qualify for deduction under Section 80C, up to the $150,000 yearly cap. The interest earned is tax-free. The maturity amount is tax-free. All three stages of the account escape tax, which is rare among savings products and is the main reason a modest headline rate can still win an after-tax comparison against a higher-rate taxable deposit. Few instruments combine a sovereign guarantee with fully tax-free returns, and that combination is the core of the PPF case.

One qualification must travel with the EEE claim, because it is stated on the calculator page and it changes the value for some savers. The 80C deduction applies under the old tax regime, so a saver who has opted for the new regime should confirm the rules for their own position before counting the deduction benefit. The interest and maturity exemptions are the durable part of the advantage. The deduction is regime-dependent, and regime choices are individual. This guide is general information, not tax advice, and the calculator page carries the same statement.

PPF versus FD versus SIP

The comparison that matters is after tax, after risk, and over the same horizon. PPF offers a sovereign-guaranteed, tax-free rate, currently 7.1%. Bank fixed deposits pay similar pre-tax rates, but the interest is taxable, so the after-tax return falls below PPF at the same headline rate for a taxpayer. Equity systematic investment plans have historically returned more over 15 or more years, but with market risk and tax on long-term gains, and with no guarantee at all. The calculator page states the comparison in one line, and it is the right line: compare directly with the FD Calculator and the SIP Calculator, because PPF usually wins for the safe, tax-free debt portion of a portfolio, while market investing wins for the growth portion that can tolerate falls.

Horizon decides the mix. Over 15 years, the PPF term matches long goals: retirement funding, a child education fund started early, or a debt anchor held beside market investments. Over 3 years, PPF is the wrong tool, because the money cannot be withdrawn freely and the term is far longer than the goal. A fixed deposit or a liquid fund fits a short goal better, and the RD Calculator fits a monthly habit with a shorter horizon. Match the product to the goal date first, and only then compare rates, because a high rate in the wrong product is still the wrong product.

The final comparison is behavioral, and it favors PPF more than the arithmetic does. The 15-year term, the yearly cap, and the withdrawal limits all discourage raiding the account for short-term wants, while the 5th-of-the-month rule rewards a steady deposit habit. A product that is slightly harder to raid is, for most savers, a product that actually reaches maturity. The best return in the world is worthless if the money is spent in year three. PPF structure is part of its return, not an obstacle to it.

Checks before you start, and each year after

Four checks, run once at the start and once a year, keep a PPF projection honest. First, confirm the current rate and enter it in the calculator, because the rate is revised periodically and every projection on this page is an estimate at a stated, constant rate. Second, confirm the deposit against the cap: no more than $150,000 a year across all accounts, and no less than $500 a year to keep the account active. Third, set the deposit date on or before the 5th of the month, and check the timing choice in the calculator matches the habit. Fourth, read the year-by-year table to the end, not just the maturity headline, and confirm the balance path looks like steady growth rather than a surprise in the final years.

Each year after, the check is shorter. Re-enter the current rate, confirm the deposit was made by the 5th in each month, and compare the actual balance with the projected balance for that year. A gap usually traces to a late deposit, a missed month, or a rate change, and each has a different fix. A late deposit is fixed by moving the deposit date. A missed month is fixed by catching up within the yearly cap, if the cap allows. A rate change is fixed by re-running the projection at the new rate and resetting expectations. None of the three is a reason to abandon the account. All three are reasons to keep the projection current, which takes five minutes a year and is the cheapest maintenance any long-term savings plan will ever ask for.

Frequently asked questions

What is a PPF account?

PPF stands for Public Provident Fund, a long-term savings scheme with a government-set interest rate and fully tax-free returns. An account runs for 15 financial years, can be extended in 5-year blocks, and is opened with a bank or a post office. Amounts here are shown in dollars like the rest of the page; the scheme itself is rupee-denominated.

What is the maximum I can deposit in PPF?

The maximum deposit is $150,000 per financial year, across all your PPF accounts combined, and the minimum to keep an account active is $500 a year. Deposits above the cap earn no interest and are not eligible for the tax deduction, so the calculator blocks any amount over the cap.

How is PPF interest calculated?

Interest is computed for each month on the lowest balance between the close of the 5th and the end of the month, then credited on 31 March. For a yearly deposit made at the start of the year it adds up to a closed form: maturity equals the deposit times the quantity one plus the rate raised to the power of the years, minus one, divided by the rate, times one plus the rate. Deposit by the 5th so the money counts from that month.

What happens to my PPF after 15 years?

You can withdraw the full maturity amount tax-free, or extend in 5-year blocks, with fresh deposits (keeping the yearly cap and the tax deduction) or without them (the balance keeps earning interest, with one partial withdrawal allowed per year). The tenure control on the calculator models up to 50 years so extension scenarios can be compared.

Can I withdraw from PPF early, or borrow against it?

From the 7th year you can withdraw part of the balance, once per financial year, and in years 3 to 6 you can borrow up to 25% of the balance at the end of the 2nd preceding year, with the principal repayable within 36 months. Any outstanding loan must be repaid before a withdrawal. The calculator withdrawal and loan tools compute the exact limits from your balances.

Is PPF interest taxable?

No. PPF has EEE status: deposits get an 80C deduction, interest is tax-free, and maturity proceeds are tax-free. The 80C deduction applies under the old tax regime, so confirm the rules for your own position before counting that benefit.