Banking & Savings · 8 min read
PPF account: the complete guide to rules, returns and the 15-year math
PPF gives you 7.1 percent, fully tax-free, backed by the government. Here is how the account actually works, the deposit-date trick, and who it suits.
Krish Dalal
Founder and editor, PaisaExpert. Master's in Business Management, SP Jain School of Global Management, London. · Last updated 2026-06-07
PPF is unglamorous and that is the point. It will not double your money in three years, and anyone who tells you it should has been listening to the wrong people. What it does is pay a government-backed, fully tax-free 7.1 percent, year after year, with zero market risk. For the safe, long-term part of a portfolio, especially money you simply cannot afford to see fall, it is one of the best instruments India offers. It pairs naturally with the higher-risk, higher-return equity in your SIP.
The rules that matter
| Feature | Detail |
|---|---|
| Interest rate | 7.1 percent a year, set by the government each quarter |
| Tax status | EEE: deposit qualifies for 80C, interest is tax-free, maturity is tax-free |
| Yearly deposit | Minimum ₹500, maximum ₹1.5 lakh |
| Tenure | 15 years, extendable in blocks of 5 years |
| Where to open | Any post office or most banks, or online via your bank |
| Partial withdrawal | Allowed from the 7th year onwards |
| Loan against it | Allowed between the 3rd and 6th year |
The 'EEE' status is what makes PPF special. Most safe instruments are taxed somewhere: a savings account or FD pays interest that is fully taxable at your slab. PPF is exempt at all three stages, so its 7.1 percent is genuinely 7.1 percent in your hand, which for a 30 percent slab earner is the equivalent of a taxable instrument paying over 10 percent.
The deposit-date trick most people miss
PPF interest is calculated on the lowest balance in your account between the 5th and the last day of each month. So if you deposit on the 6th, that money earns nothing for that whole month. Deposit on or before the 5th and it counts immediately. If you invest a lump sum once a year, do it before the 5th of April to earn a full year of interest on it. If you invest monthly, set the transfer for the 1st to the 4th. Over 15 years, this single habit is worth a meaningful amount of free interest.
Frequently asked
What to do next
- Open a PPF account through your bank's app or at a post office. It takes minutes if you already bank online.
- Decide your yearly contribution, anywhere from ₹500 up to ₹1.5 lakh, based on how much safe, locked money you want.
- Set your deposit for on or before the 5th of the month to capture that month's interest.
- Use PPF as the safe anchor and keep your growth money in equity, so the two balance each other.