A PPF account pays 7.1% a year as of the July–September 2026 quarter, fully tax-free and backed by the Government of India. You can deposit anywhere from ₹500 to ₹1.5 lakh per financial year, and the money stays locked for 15 years. For shop owners and the self-employed, who get no EPF, it is the closest thing to a guaranteed retirement fund.
What is a PPF account?
The Public Provident Fund is a government small savings scheme, run under the PPF Scheme 2019, where an individual deposits money for 15 years and earns tax-free interest at a rate the government notifies. It is a personal account, not a business account. Your dukaan cannot open one; you, as an individual, can.
That distinction matters more for business owners than for anyone else. A salaried employee has EPF quietly building a retirement corpus every month. A kirana owner, a wholesaler, a freelancer has nothing of the sort unless they create it themselves. PPF is the standard tool for that job: sovereign-backed, disciplined by design, and EEE in tax language, meaning the deposit, the interest, and the maturity amount can all escape tax (with one regime-related catch covered below).
What is the current PPF interest rate?
PPF pays 7.1% per annum for the July–September 2026 quarter, as notified by the government and published by the National Savings Institute. The rate is reviewed and set quarterly by the Central Government, so it is not fixed for the life of your account. In practice, though, it has been remarkably still: 7.1% every single quarter since 1 April 2020, through 30 September 2026 as of the latest notification. That is over six years without a change, even while bank FD rates rose in 2022–23 and fell again through 2025–26.
A quick look at where the rate has been, per NSI's rate-since-inception table:
| Period | PPF rate |
|---|---|
| Through the 1990s | 12% p.a. |
| Most of the 2000s | 8% p.a. |
| 1 April 2020 to 30 September 2026 (notified) | 7.1% p.a. |
Two mechanics decide how much of that rate you actually earn:
Interest is calculated monthly on the lowest balance in your account between the close of the 5th and the end of the month. Money deposited on the 20th earns nothing for that month. Deposit on or before the 5th.
Interest is credited only once a year, at the end of the financial year (SBI states it plainly: paid on 31st March every year). Your passbook will not show monthly interest entries, and that is normal.
How much can you deposit in a PPF account?
The limits as of 2026: minimum ₹500 per financial year, maximum ₹1,50,000 per financial year, in multiples of ₹50, per the scheme rules. The ₹1.5 lakh cap is per person across accounts, so if you also run a PPF account for your minor child as guardian, deposits into both count against the same limit.
You can deposit however suits your cash flow. The old cap of 12 instalments a year was abolished by the 2019 scheme, so any number of deposits is fine now; many competitors' articles still repeat the outdated limit. A trader with lumpy income can put in ₹2,000 in a slow month and ₹30,000 after Diwali season without breaking any rule.
If you deposit as one annual lump sum, do it on or before April 5. Because of the lowest-balance-after-the-5th rule, that single timing decision earns you interest for all 12 months of the year.
The lock-in runs for 15 complete financial years counted from the end of the year you opened the account, so from your first deposit it is effectively about 16 years. And keep the ₹500 minimum going every year: skip it and the account is treated as discontinued, revivable at ₹50 per defaulted year plus the missed minimum deposits.
What are the tax benefits of PPF?
PPF still holds EEE status as of 2026, but the first E now depends on which tax regime you file under. Here is the honest picture:
- Deposit: deductible under Section 80C up to ₹1.5 lakh a year, but only if you file under the old tax regime. The new regime, which has been the default since FY 2023-24, allows no 80C deduction at all.
- Interest: exempt under Section 10, under both regimes.
- Maturity amount: completely tax-free, under both regimes.
This changes how you should think about PPF in 2026. With income up to roughly ₹12 lakh effectively tax-free under the new regime's Section 87A rebate (FY 2025-26 slabs, per ClearTax), many small traders pay little or no income tax anyway and get zero extra benefit from the 80C leg. For them, PPF is not a tax hack. It is a safety-and-rate play: 7.1% that no one can tax, ever. If your income is higher and you deliberately opt into the old regime, the 80C deduction stacks on top. Regime choice depends on your full financial picture, so run it past your CA before deciding. For background on how the slab system works, see how income tax works in India.
One more benefit that rarely gets mentioned and matters enormously to anyone carrying business risk: under the scheme rules, a PPF balance cannot be attached under any order or decree of a court for your debts or liabilities. If the dhandha fails and creditors come after your assets, the PPF corpus is legally out of their reach.
Can you withdraw money or take a loan from PPF before maturity?
Yes, on a fixed timetable. Partial withdrawals open up from the 7th financial year: one withdrawal per year, capped at 50% of the balance at the end of the 4th preceding year or the preceding year, whichever is lower.
Before that, from the 3rd to the 6th financial year, you can take a loan against the balance instead: up to 25% of the balance at the end of the 2nd preceding year. The pricing is unusual. Repay the principal within 36 months and you pay just 1% per annum interest; stretch beyond 36 months and it becomes 6% per annum. (Older articles still quote 2%, the pre-2019 rate.) Only one loan can run at a time, and no fresh loan is given until the earlier one is repaid. Since the loan is against your own balance, your CIBIL score plays no role, unlike a regular business loan where it decides everything.
Full premature closure is allowed only after 5 years, and only on specific grounds: life-threatening illness (self or family), higher education, or change of residency status. The penalty is real: you get 1% less interest than what your account earned throughout.
What happens when the 15 years are over?
At maturity you have three options, and one of them has a deadline people miss.
You can withdraw the entire corpus, tax-free. You can extend the account in 5-year blocks with fresh deposits, any number of times, by filing Form-4 within one year of maturity. Or you can simply leave the money in place without further deposits, indefinitely, where it keeps earning the prevailing rate with one free withdrawal allowed per year.
The deadline: if you keep depositing after maturity without having filed Form-4 in that one-year window, those deposits earn nothing and are refunded without interest. And during an extension block with deposits, total withdrawals are capped at 60% of the balance you had when the block began.
Who can open a PPF account and how?
Only resident Indian individuals can open a PPF account, one account per person, with no age limit. Joint accounts are not allowed. A guardian can open one additional account on behalf of a minor (or a person of unsound mind). NRIs cannot open new accounts; an account opened while you were a resident runs only to its 15-year maturity, with no extension.
Where to open, as of 2026: any post office or authorised bank, and for most bank customers the whole thing is now doable online through netbanking or the mobile app. SBI, HDFC Bank, ICICI Bank, Axis, PNB, Bank of Baroda, Canara and Union Bank all offer online PPF opening. You will need PAN, Aadhaar or another address proof, and a photograph; the same basic KYC set covered in our guide to documents required for a bank account.
Is PPF better than an FD or mutual funds?
On current numbers, PPF out-earns fixed deposits at major banks: 7.1% tax-free versus SBI's best retail FD rate of 6.40–6.45% (effective 15 December 2025), which is fully taxable at your slab. Some small finance banks still advertise FD rates above 7%, so check post-tax returns for your slab before assuming, but at large banks the gap is clear. Mutual funds are a different animal altogether: market-linked, historically capable of beating PPF over long periods, and equally capable of a losing year, with no guarantee anywhere.
| PPF | Bank FD | Equity mutual funds / ELSS | |
|---|---|---|---|
| Return (2026) | 7.1% p.a., reset quarterly | ~6.4% at SBI; some small banks higher | Market-linked, not guaranteed |
| Tax on returns | None, ever | Taxed at your slab | Capital gains tax applies |
| Risk | Sovereign guarantee | Bank risk; DICGC insures deposits up to ₹5 lakh (2026) | Full market risk |
| Lock-in | 15 years (partial exit from year 7) | Your chosen tenure; early exit with penalty | ELSS 3 years (statutory); others open-ended |
| Creditor protection | Cannot be attached by court decree | No special protection | No special protection |
The practical read for a business owner: an FD is for money you may need in one to three years. Mutual funds are for long-term growth if you can stomach swings. PPF is the untouchable layer, the retirement money that your business's bad year, your bank's health, and the taxman all cannot reach. Most self-employed people are best served holding all three, with PPF as the floor.
FAQ
Can I open a PPF account online in 2026?
Yes. Most major banks (SBI, HDFC, ICICI, Axis, PNB and others) let existing customers open a PPF account fully online through netbanking or their app. You need PAN, Aadhaar or other address proof, and a photo. Post offices also open PPF accounts.
Is PPF interest taxable under the new tax regime?
No. PPF interest and the maturity amount are tax-free under both the old and new regimes. Only the Section 80C deduction on deposits requires the old regime; the new regime, default since FY 2023-24, gives no 80C benefit.
Can I withdraw money from PPF before 15 years?
Partially, yes. From the 7th financial year you can make one withdrawal a year, up to 50% of the eligible balance. Full closure is allowed only after 5 years, on grounds like serious illness, higher education or change of residency, with a 1% interest penalty.
What is the minimum deposit to keep a PPF account active?
₹500 per financial year as of 2026. Miss it and the account is discontinued; reviving it costs ₹50 per defaulted year plus the missed minimum deposits.
Is PPF better than a fixed deposit?
On 2026 numbers, yes for long-term money: PPF pays 7.1% tax-free while SBI's best retail FD pays 6.40–6.45% before tax. FDs win on flexibility, since your money is not locked for 15 years.