PPF Rules in Plain Language: Deposits, Interest, Maturity, Withdrawals

The Public Provident Fund is India’s most popular long-term small-savings account, and also one of the most misunderstood. People lose a month’s interest every year by depositing on the wrong date, assume the account matures exactly 15 years after opening, or think the money is locked for all 15 years. The rules are set out in the Public Provident Fund Scheme, 2019 (notified by the Department of Economic Affairs on 12 December 2019), and this guide walks through them in plain language, paragraph by paragraph. The maturity figures come from our PPF calculator at the notified rate of 7.1% for Q3 FY 2026-27 (2026-10-01 to 2026-12-31).

1. Who can open an account, and how many

An individual resident in India can open one PPF account in their own name, and may also open an account on behalf of a minor or a person of unsound mind of whom they are the guardian. Joint accounts are not allowed. If a second account is opened by mistake, it is treated as irregular and does not earn interest unless regularised under the rules.

2. Deposits: ₹500 to ₹1,50,000 a year (paragraphs 4 and 5)

• Minimum ₹500 in a financial year, otherwise the account is discontinued.
• Maximum ₹1,50,000 in a financial year, in multiples of ₹50, in one lump sum or in as many instalments as you like.
• The ₹1,50,000 ceiling is shared between your own account and any account you operate for a minor. Any excess is refunded without interest and does not qualify for the income-tax deduction.
• A discontinued account can be revived by paying the arrears of ₹500 for each missed year plus a fee of ₹50 per year (paragraph 6). Until then it earns interest on its balance but does not allow loans or withdrawals.

3. Interest: the 5th-of-the-month rule (paragraph 7)

This is the rule that costs careless depositors the most. For every calendar month, interest at the notified rate is allowed on the lowest balance in the account between the close of the 5th day and the end of the month, at one-twelfth of the annual rate. The monthly figures are added up and credited once, at the end of the financial year.

In practice:

• A deposit made on or before the 5th earns interest for that month.
• A deposit made on the 6th or later earns nothing for that month; it starts earning the next month.
• Because interest is credited only on 31 March, the account compounds yearly, not monthly.

Month's interest = lowest balance (5th → month end) × rate ÷ 12
Year's interest  = sum of 12 monthly figures, credited on 31 March

What the rule means in rupees

Computed by the calculator’s own function at 7.1%, 15 years of the maximum deposit:

Depositing the lump sum a few days late costs ₹22,471 over 15 years; spreading it over the year costs ₹1,23,608, because each month’s money waits before it starts earning. If you can, deposit early in April.

The rate itself is notified by the Government every quarter. It has been 7.1% since 1 January 2024 (set by the DEA Office Memorandum of 29 December 2023 and left unchanged each quarter since, most recently on 30 September 2026). A 15-year projection at today’s rate is an illustration, not a promise.

4. Maturity: 15 years from the end of the year of opening (paragraph 11)

The account matures on the expiry of 15 years from the end of the financial year in which it was opened. An account opened in August 2026 does not mature in August 2041; it matures on 1 April 2042, because the financial year of opening ends on 31 March 2027. You can therefore make deposits in 16 financial years before maturity.

On maturity you have three choices:

1. Close the account and take the full balance.
2. Extend without deposits: the balance keeps earning interest at the notified rate, and you can make one withdrawal of any amount each financial year.
3. Extend with deposits in blocks of 5 years (paragraph 12), by submitting the prescribed form within one year of maturity. Each extension allows withdrawals of up to 60% of the balance at the start of the block.

Extensions change the picture a lot because the interest in later years is large. At 7.1% with ₹1,50,000 a year: ₹40,68,208 after 15 years, ₹66,58,287 after 20 and ₹1,03,08,012 after 25.

5. Getting money out before maturity

Loans (paragraph 10). From the third financial year up to the end of the sixth, you can borrow up to 25% of the balance at the end of the second year preceding the application. The loan must be repaid within 36 months; interest is 1% a year above the PPF rate if repaid in time. Only one loan at a time.

Partial withdrawals (paragraph 8). From the seventh financial year, one withdrawal per year of up to 50% of the balance at the end of the fourth preceding year or the preceding year, whichever is lower. No reason needs to be given.

Premature closure (paragraph 13). Allowed only after five financial years and only for specified reasons: treatment of serious illness of the account holder, spouse, dependent children or parents; higher education of the holder or dependent children; or a change in the holder’s residency status. Interest is paid at 1% less than the rate credited from time to time.

6. Tax and other protections

• Deposits qualify for deduction under section 80C of the Income-tax Act (for those who opt for the old regime), and the interest and maturity amount are exempt from income tax under the rules in force. Check the current provisions for your situation.
• The balance cannot be attached under a court decree for the account holder’s debts (the Scheme and the Government Savings Promotion Act, 1873 provide this protection).
• Nomination can be made for one or more persons; the account can be transferred between post offices and banks free of charge.

7. Worked example: a modest saver

Not everyone can put in ₹1,50,000. At ₹50,000 a year deposited by 5 April for 15 years at 7.1%: total deposited ₹7,50,000, interest ₹6,06,070, maturity ₹13,56,070. Year 1 earns just ₹3,550; year 15 earns ₹89,898, because by then the whole balance of the earlier years is compounding. Try your own figure in the PPF calculator.

Common mistakes

• Depositing on the 10th of the month through a salary-day standing instruction. Move it to the 1st to 5th.
• Counting 15 years from the opening date. It is from the end of that financial year; the maturity date is always 1 April.
• Letting the account lapse by missing the ₹500 minimum. Set a reminder each April.
• Assuming the rate is fixed for 15 years. It is revised quarterly; re-run the calculator when a new rate is notified.
• Opening a second account in another bank. It will not earn interest.

Frequently asked questions

What is the current PPF interest rate? 7.1% per annum for Q3 FY 2026-27, as notified by the Department of Economic Affairs. Rates are announced before each quarter; the figure for January–March 2027 is due around 31 December 2026.

When should I deposit to get the most interest? On or before the 5th of the month; for a yearly lump sum, between 1 and 5 April. The table above shows the difference in rupees.

Can I withdraw the full amount after 15 years? Yes, the whole balance is paid on closure at maturity. You can also extend the account, with or without fresh deposits.

Is the PPF maturity amount taxable? Under the rules in force the interest and maturity are exempt from income tax, and deposits qualify for section 80C deduction in the old regime. Confirm the current provisions before relying on this.