The Public Provident Fund is one of India's most trusted savings instruments — backed by the Government of India, meaning your money is as safe as it gets. You invest a certain amount every year, it earns compounded interest, and at the end of 15 years you walk away with a completely tax-free lump sum. It's been 7.1% per annum for the past six years (unchanged since April 2020), and the Q1 FY 2026–27 rate announced on March 30, 2026 continues at the same level.
If you invest ₹1.5 lakh every year at 7.1%, you accumulate approximately ₹40.68 lakh at the end of 15 years — entirely tax-free. Extend for another 15 years and you're looking at over ₹1 crore. That's the power of compounding in a government-backed account.
- Any Indian resident individual (adults or on behalf of a minor child)
- Only one PPF account per person — you cannot hold multiple accounts
- Joint accounts are NOT allowed
- NRIs cannot open new PPF accounts; existing accounts can be maintained till maturity at applicable rates
- HUFs (Hindu Undivided Families) cannot open PPF accounts
At maturity (after 15 years): Fill Form C (Closure Form) at your bank or Post Office. You can also extend in 5-year blocks — either with or without making further contributions. If you extend with contributions, you can continue making deposits and earning interest. If you extend without contributions, the existing balance keeps earning 7.1% interest annually.
Premature closure: Applicable only after completing 5 years. Visit your bank/Post Office branch with your PPF passbook, Aadhaar, and PAN. Fill the premature closure form. A 1% penalty is levied on the interest earned.
Dormant account: If you miss a year's deposit, your account becomes inactive. Reactivate by paying ₹50 penalty per inactive year + ₹500 minimum deposit.
PPF is one of the rare EEE (Exempt-Exempt-Exempt) instruments in India. Under the old tax regime, contributions up to ₹1.5 lakh per year qualify for deduction under Section 80C. The interest earned is fully exempt from tax. The maturity amount is entirely tax-free. Note: Under the new tax regime (post 2023), the 80C deduction is not available, but the interest and maturity amount remain tax-free regardless of which regime you file under.