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Understanding PPF Interest Rates: A Comprehensive Guide

Team AckoFeb 16, 2024

The Public Provident Fund (PPF) was introduced in 1968 with the aim of encouraging small-time savings and providing an investment avenue with reasonable returns and tax-saving benefits. It serves as an excellent tool for building a retirement corpus for individuals, offering secured risk management through compounded returns. This article gives an overview of the PPF interest rate, which determines the return on investment.




What is the meaning of PPF interest rate?

The PPF interest rate in India refers to the rate of interest that is applicable to investments made in the Public Provident Fund (PPF) scheme. The PPF interest rate is set by the government and is subject to periodic revisions. It plays a critical role in knowing the growth of an individual's PPF investment. 

What is the current PPF interest rate?

As of the current period, which is the quarter ending in June 2022, the PPF interest rate has been set at 7.1% per annum. This means that during this specific quarter, investments in the PPF account will earn an annual interest of 7.1%, compounded on an annual basis.

The interest rate for PPF accounts is determined by the Ministry of Finance on a quarterly basis. Investors should be aware of these interest rate updates as they may impact the growth and returns on their PPF investments over time.

Benefits of higher PPF interest rate

The interest rates offered on PPF (Public Provident Fund) are usually higher than those provided on regular savings account balances and are slightly higher than the rates offered on fixed deposits.

PPF is known for offering attractive interest rates compared to regular savings accounts, making it a popular choice for long-term savings and investments. Moreover, the higher interest rates, along with the compounding effect, contribute to the growth of the investment over time, making it an appealing option for individuals looking for secure and stable returns on their savings.

PPF interest calculation

PPF (Public Provident Fund) interest is calculated based on the lowest balance in the account between the 5th and last day of each month. It is computed monthly but is credited annually at the end of the financial year, regardless of the account's standing throughout the year.

PPF Interest Rate 2023 and earlier

Here’s a table showcasing the PPF interest rates in the recent past. A closer look at the rates highlights that they have been declining.


Rate of interest in percentage

Apr 2022 to Mar 2023


Apr 2021 to Mar 2022


Apr 2020 to Mar 2021


Jan 2020 to Mar 2020


Oct 2019 to Dec 2019


July 2019 to Sep 2019


Apr 2019 to Jun 2019


PPF investment and PPF interest rate

A PPF (Public Provident Fund) account can be opened with a minimum deposit of Rs. 100. Investors can contribute a minimum of Rs. 500 and a maximum of Rs. 1.5 lakhs per financial year. The tenure of the PPF account is a minimum of fifteen years, which can be extended in blocks of five years thereafter. During the tenure, deposits must be made at least once a year.

One of the key advantages of investing in PPF is that it is backed by the Government, ensuring an assured and risk-free return. However, the PPF interest rate has shown a decline in recent times.

To make the most of the prevailing PPF interest rate, investors can maximise their investment by contributing up to the maximum permissible limit of Rs. 1.5 lakhs. Under Section 80C of the Income Tax Act, investors can claim a deduction for the principal amount invested up to Rs. 1.5 lakhs, thereby providing tax benefits. Moreover, both the interest earned and the maturity amount received are also tax-free, making PPF a tax-efficient investment option.

Overall, PPF offers a secure and tax-efficient way to save for the long term, making it a popular choice among investors looking for stable returns and tax benefits.

Frequently Asked Questions (FAQs)

Here’s a list of FAQs related to PPF and PPF interest rates in India.


Who sets the PPF interest rate?

The PPF interest rate is set by the Government of India.

What is the maturity period when it comes to a PPF?

It is fifteen years from the date of its opening. However, once it is completed, the holder of the account has the choice to prolong the duration in blocks of five years by submitting an application for an extension. This means that you can continue to keep your PPF account active and earn interest for additional five-year periods as per your requirement. 

When can I withdraw the amount from my PPF Account?

You can withdraw after the completion of the 15-year lock-in period. This means that the funds become fully accessible after the maturity period of fifteen years from the date of opening the account. However, there is also a provision for partial withdrawal before the completion of the maturity period. Starting from the 7th financial year, you can make partial withdrawals from your PPF account for emergency purposes. 

How is the PPF interest rate determined?

The PPF interest rate is set by the Ministry of Finance and is subject to periodic revisions. It is announced on a quarterly basis and remains applicable for that specific quarter.

Is the PPF interest rate fixed for the entire tenure?

No, the PPF interest rate can vary from one quarter to another as it is subject to changes based on prevailing economic conditions and government policies.

Is the interest earned on PPF taxable?

No, the interest earned on PPF is completely tax-free, making it an attractive tax-saving investment option.

Can the PPF interest rate change during the account's tenure?

Yes, the PPF interest rate can change periodically, typically on a quarterly basis, depending on the prevailing economic conditions and government policies.

Can I choose a fixed PPF interest rate for my account?

No, the PPF interest rate is determined by the Ministry of Finance and is the same for all PPF accounts during a specific quarter.

Can I switch to a different PPF scheme with a higher interest rate?

No, all PPF accounts offered by authorised banks and post offices have the same interest rate determined by the government.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions. 


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