Public Provident Fund: PPF Interest Rate 2026, Tax Benefits, Withdrawal Rules

The Public Provident Fund (PPF) is a government-backed savings scheme that provides tax-free returns and long-term wealth creation. For the second quarter of FY 2026-27, the interest rate continues at 7.1% per annum. Backed by sovereign guarantee, offering compounding benefits, and enjoying EEE tax status, PPF continues to be a highly secure and reliable option for retirement planning and tax savings in India. 

Key Highlights 

• Interest Rate: 7.1% p.a. (FY 2026–27).
• Investment Limits: Min Rs. 500, Max Rs. 1.5 lakh per year, for employees and self-employed individuals.
• Risk-Free & Tax Benefit: Contribution exempt up to Rs. 1.5 lakh per annum, and interest earned and maturity amount are fully tax-exempt.
• Loans & Withdrawals: Loan available after 1 year (up to 25% of balance). Partial withdrawal after 5 years, full after 15 years.

PPF Latest Updates 2026

• Interest Rate Unchanged: The PPF interest rate remains 7.1% p.a. for Q2 FY 2026-27 (July–September 2026).
• No Change in Investment Limits: The minimum annual deposit continues to be Rs. 500, while the maximum investment remains Rs. 1.5 lakh per financial year.
• Income Tax Act, 2025 Update: Tax benefits continue under the Income Tax Act, 2025, with deductions available under Section 123 (corresponding to the earlier Section 80C), subject to the applicable provisions.

What is PPF?

The Public Provident Fund (PPF) is a popular long-term savings scheme offering attractive interest rates and tax benefits. The interest earned on PPF is tax-exempt, making it an effective instrument for building wealth without worrying about tax liabilities.

PPF accounts can now be opened using Aadhar based biometric eKYC authentication. Also, funds can be deposited and withdrawn using this paperless facility from July 27th, 2026, and the PPF interest rate for Q2 (July-Sep) of FY 2026-27 remains the same at 7.1% p.a.

Public Provident Fund Interest Rate 2026

The Public Provident Fund (PPF) interest rate for the July-September 2026 quarter (Q2,FY 2026-27) has been retained at 7.1% per annum, which is compounded annually. The Ministry of Finance announced this on 30th June 2026, along with rates for other rates for other small savings schemes, keeping the PPF rate unchanged from the previous quarter. The interest rate has remained unchanged since April 1,2020.  The interest is calculated  monthly on the lowest balance between the 5th and last day of month, however it is credited to an account only at year-end, hence depositing before 5th of every month helps maximise returns. 

As per the EEE (exempt-exempt-exempt) scheme PPF allows tax-free interest and withdrawls, along with Section 80C (Section 123 of the Income Tax Act, 2025) the deduction upto Rs. 1.5 Lakh Rupee per year under the old tax regime.

PPF Interest Rate History

PPF interest rate has remained constant at 7.1% per annum for a long time thus indicating stability in the scheme's return. 

PPF Calculator

PPF calculator can be used to estimate the maturity amount and interest earned based on your contributions.

Tax Benefits of Public Provident Fund

Apart from being a low-risk investment option and assist in retirement planning, this fund also results in tax benefits, thus reducing your tax burden as well. 

1. Deduction on Contribution - Section 80C 

• Contribution to Public Provident Fund can be claimed as a deduction under section 80C of the Income Tax Act.
• A maximum deduction of Rs. 1.5 lakhs can be claimed, but only under the old regime.
• Deduction for contribution to Public Provident Fund is not available under the new tax regime.

2. Taxability of Interest on PPF

• Interest on PPF is exempt for contributions made up to Rs. 5 lakh per annum.
• Whereas, interest accruing on PPF deposited on or before 1st April, 2021, is fully exempt.

How to Open a PPF Account?

A PPF account can be opened with either a Post Office or with any nationalized bank like the State Bank of India or Punjab National Bank, etc. These days, even certain private banks like ICICI, HDFC and Axis Bank among others are authorized to provide this facility.

1. How to Open a PPF Account Online

Step 1: Log into your bank account on the internet banking or mobile banking platform.

Step 2: Select the ‘Open a PPF Account’ option.

Step 3: If the account is for self, click on the ‘Self Account’ option. If you are opening the account on behalf of a minor, select the ‘Minor Account’ option.

Step 4: Enter the relevant details in the application form.

Step 5: Key in the total amount you want to deposit in the account per financial year.

Step 6: Submit the application. An OTP will be sent to the registered mobile number. Enter it in the relevant field.

Step 7: Your PPF account will get created in an instant! Your PPF account number will be displayed on the screen. An email will be sent to your registered email address with all the details confirming the same.

2. How to Open a PPF Account in a Post Office

Step 1: Get an application form from your nearest post office or online.

Step 2: Fill up the form and submit it with the required KYC documents and a passport-size photograph.

Step 3: Make the initial deposit required to open a post office PPF account. The amount can range from Rs. 500 up to Rs. 1.5 lakh per financial year.

Step 4: Once your application is processed, a passbook will be given to you for the PPF account opened.

PPF vs ELSS vs NPS vs SSY: Comparison

Documents Required to Open PPF Account

You need to submit the below-mentioned documents:

• Duly filled account opening application form
• KYC documents such as Aadhaar, Voters ID, Driving license, etc.
• Residential address proof
• Nominee declaration form
• Passport size photograph

Feature of PPF Scheme

Any person wanting to invest in PPF can start with a minimum investment of Rs. 500. However, the maximum amount that one can invest is Rs. 1.5  lakh per year.

1. Eligibility

• Individuals (adults or on behalf of minors).
• Only one PPF account per person (excluding minors).

2. Account Opening

• Minimum opening balance: Rs. 100.
• Nomination is allowed at the time of opening or later.
• Joint accounts are not allowed. Only individual accounts are permitted.
• Parents or guardians can open a PPF account on behalf of a minor.

3. Tenure and Extension

• 15 years (both tenure and lock-in period).
• Post maturity: Extend in 5-year blocks (with/without contributions) or close the account.

4. Contributions

• Minimum: Rs. 500/year.
• Maximum: Rs. 1.5 lakh/year.
• Frequency: At least once/year; up to 12 installments or lump sum.
• Inactive Account Reactivation: Rs. 50 penalty + Rs. 500 deposit.

5. Risk

• Government-backed, safe investment. Suitable for risk-averse investors.

6. Loan Against PPF

• Available after 1 year of opening.
• Max Loan: 25% of available balance.
• Second loan only after first is fully repaid.

7. Withdrawals

• Full: After 15 years.
• Partial: After 5 years; max 50% of balance at end of 4th year or year before withdrawal.
• Premature Closure: Allowed for serious illness or higher education.

PPF Withdrawal Rules

In case you wish to partially or completely withdraw the balance lying in your PPF account.

1. Get the application for withdrawal of PPF from the bank or post office where you opened the PPF account (Form 3/Form C).
2. Fill in the application form with relevant information.
3. Submit the application to the concerned branch of the bank or post office where your PPF account lies. 

PPF Withdrawal Form

An individual must file Form 3/Form C for the withdrawal of the PPF amount. This form has 3 sections:

Section 1: Declaration section where you must give your PPF account number and the amount of money you propose to withdraw. Along with that, you also need to mention how many years have actually passed since the account was first opened. 

Section 2: Office use section which comprises details like:

• Date when the PPF account was opened
• Total balance standing in the PPF account
• Date on which the previously requested withdrawal was allowed
• Total withdrawal amount available in the account.
• The amount of money sanctioned for withdrawal.
• Date and signature of the person in charge – usually the service manager.

Section 3: The bank details section asks for the details of the bank where the money is to be credited directly or the bank in whose favour the cheque or the demand draft is to be issued. It is also mandatory to enclose a copy of the PPF passbook along with this application.  

Loan against PPF and Interest Rate

The Public Provident Fund (PPF) scheme allows account holders to avail a loan instead of making a premature withdrawal during the initial years. A loan can be taken from the 3rd financial year up to the end of the 6th financial year from the year in which the account was opened. The maximum loan amount is 25% of the PPF balance at the end of the second financial year immediately preceding the year of application.

Suppose Rahul opened his PPF account in April 2023.

• Loan application date: July 2025
• Eligible balance: PPF balance at the end of FY 2023-24 (the second financial year preceding the year of application)
• PPF balance (31 March 2024): Rs. 2,00,000
• Maximum loan available: 25% of Rs. 2,00,000 = Rs. 50,000

Rahul can therefore avail a PPF loan of up to Rs. 50,000. The loan must be repaid within 36 months, and interest is charged at 1% per annum above the applicable PPF interest rate.

The loan must be repaid within 36 months, and the interest rate is 1% per annum above the applicable PPF interest rate. Once the loan is fully repaid, you can apply for another loan during the eligible period, subject to the scheme rules. If the loan is not repaid within the maximum 36-month tenure, the penalty rate increases to 6% above the PPF rate.

How to Close a PPF Account?

• As per the rules governing PPF accounts, you can fully withdraw your PPF account balance only after the account completes its tenure of 15 years. 
• Before completing the full tenure, you cannot withdraw the entire account balance under any circumstances. 
• However, premature withdrawal of up to 50% of the account balance is allowed after completing 5 years. This is permitted under special circumstances only.

The procedure to close a PPF account after completion of its tenure in the post office is given below:

1. Fill up the relevant information in Form C and attach your PPF passbook.
2. Submit this to the relevant Post Office/bank branch where the account is held.
3. Your application will be processed and the account will be closed. You will receive the payment in your savings account linked to the PPF account

Can I Have Multiple PPF Accounts?

An individual is permitted to hold only one PPF account in their own name. If multiple PPF accounts are opened inadvertently, only the primary (valid) account will continue to earn interest. The additional account(s) are treated as irregular, and no interest is payable on the balance held in those accounts until they are regularised or closed in accordance with the applicable rules.

How to Transfer a PPF Account?

You can transfer your PPF account to another branch of the bank/post office, switch from bank to post office or switch from post office to a bank. Please note that there is no online facility to transfer funds in PPF so far. Here is the offline procedure that needs to be followed.

Step 1: Visit the bank or post office branch where your PPF account is held.

Step 2: Request the application form to transfer the PPF account and fill it up with the relevant details.

Step 3: The branch representative will process your application and send it with the necessary documents and payment to the new branch.

Step 4: Once the new branch receives your application and supporting documents, you have to submit a new PPF account opening application along with the old PPF account’s passbook. You may change the nominee at this point.

Step 5: Once this application is processed, your PPF account is successfully transferred to the new branch.

Conclusion 

PPF accounts offer a stable returns more suitable for risk averse investors, planning for retirement. While it offers attractive interest rates, tax benefits and various other advantages, its long tenure and comparatively lower returns as compared to medium risk and high risk funds need to be considered before opting to open a PPF account.