The Ministry of Finance, GoI sets out the PPF rate of interest which is paid off on 31st March every year. The current PPF interest rate for the quarter of October 2020 – December 2020 is 7.1%.
The interest is calculated every month but is credited to the investor’s account at the end of the year. The Public Provident Fund (PPF) interest is calculated every month on the lowest balance at the credit of the account balance between the close of the fifth day and the last day of every month.
Good to Know: The investor should deposit a fixed amount every month before the 5th to fetch the interest for the entire month. By doing this, the investor can gain maximum return on the same.
Information about PPF and PPF Interest Rate:
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What is PPF?
The PPF (Public Provident Fund) is a long term (maturity of 15 years) small savings scheme backed by the Government of India, that provides tax benefits to investors under Section 80C of the Income Tax Act 1961.
In other words, the Public Provident Fund scheme is an investment with reasonable returns combined with income tax benefits. PPF has a lock-in period of 15 years and can be extended in a block of 5 years. Post this lock-in period of 15 years the PPF maturity amount can be withdrawn.
Features of PPF:
The key silent features of the Public Provident Fund (PPF) account is as follows:
- The present rate of interest on the subscriptions made to the fund is 7.1 % per annum during the quarter of October to December 2020.
- The minimum deposit amount is 500/- per annum and the maximum deposit amount is Rs. 1,50,000/- per annum, either in a one-time payment or in a recurring deposit.
- The PPF scheme is for 15 years.
- Investment amount up to Rs 1,50,000/- per annum qualifies for Income Tax Rebate under section 80C of IT Act.
- Interest earned on PPF amount is completely tax-free.
- Deposits to PPF account can be made in a lump sum or in 12 installments.
- One deposit with a minimum amount of Rs 500/- is mandatory in each financial year in a PPF scheme.
- Withdrawal from the PPF account is permissible from the 6th financial year.
- The loan facility is also available in the PPF account from the 3rd financial year up to the 5th financial year.
Eligibility Criteria to Open a Post Office PPF Account:
- Any Individual who is a resident of India is eligible to open an account under the Public Provident Fund (PPF) scheme. A PPF account may be opened under the name of a minor candidate by his/her legal guardian. Each person is eligible for only one PPF account under his/her name.
- Any individual who either a working employee or is a pensioner or self-employed or belongs to any other category can open a PPF account.
PPF Interest Rate:
The PPF account interest is paid on the amount in the investor’s account. The PPF rate of interest is reviewed by the Ministry of Finance, GoI every quarter and over the past several years the return has been witnessing a downtrend.
The current rate of interest on the subscriptions made to the PPF is 7.1 % per annum during the quarter of October to December 2020. The interest rate applicable to the Public Provident Fund is decided by the Ministry of Finance and is liable to change every quarter.
Historical PPF Rate of Interest:
The following are the quarter-wise historic PPF interest rates for FY 2004-05 to FY 2019-20:
| Financial Year | Time Period | PPF Interest Rate (per annum) |
| 2020-2021 | October 2020 – December 2020 | 7.1% |
| 2020-2021 | July 2020 – September 2020 | 7.1% |
| 2020-2021 | April 2020 – June 2020 | 7.1% |
| 2019-2020 | January 2020 – March 2020 | 7.9% |
| 2019-2020 | October 2019 – December 2019 | 7.9% |
| 2019-2020 | July 2019 – September 2019 | 7.9% |
| 2019-2020 | April 2019 – June 2019 | 8.0% |
| 2018-2019 | January 2019 – March 2019 | 8.0% |
| 2018-2019 | October 2018 – December 2018 | 8.0% |
| 2018-2019 | July 2018 – September 2018 | 8.0% |
| 2018-2019 | April 2018 – June 2018 | 7.6% |
| 2017-2018 | January 2018 – March 2018 | 7.6% |
| 2017-2018 | October 2017 – December 2017 | 7.8% |
| 2017-2018 | July 2017 – September 2017 | 7.8% |
| 2017-2018 | April 2017 – June 2017 | 7.9% |
| 2015-2016 | April 2015 – March 2016 | 8.70% |
| 2014-2015 | April 2014 – March 2015 | 8.70% |
| 2013-2014 | April 2013 – March 2014 | 8.70% |
| 2012-2013 | April 2012 – March 2013 | 8.80% |
| 2011-2012 | April 2011 – November 2011 | 8.0% |
| 2011-2012 | December 2011 – March 2012 | 8.60% |
| 2010-2011 | April 2010 – March 2011 | 8.0% |
| 2009-2010 | April 2009 – March 2010 | 8.0% |
| 2008-2009 | April 2008 – March 2009 | 8.0% |
| 2007-2008 | April 2007 – March 2008 | 8.0% |
| 2006-2007 | April 2006 – March 2007 | 8.0% |
| 2005-2006 | April 2005 – March 2006 | 8.0% |
| 2004-2005 | April 2004 – March 2005 | 8.0% |
How is the PPF rate of interest calculated?
As per the Public Provident Fund (PPF) scheme rules, PPF interest rate calculation is on a monthly basis on the PPF balance in the investor’s account but is credited only at the end of the financial year on March 31st.
Good to Know: The investor should deposit a fixed amount every month before the 5th to fetch the interest for the entire month. By doing this, the investor can gain maximum return on the same.
You may Calculate the SBI PPF Interest rate by using: SBI PPF Calculator
OR
You may Calculate the Post Office PPF Interest rate by using: Post Office PPF Calculator
OR
You may Calculate the ICICI Bank PPF Interest rate by using: ICICI PPF Calculator
Tax-saving benefits of PPF:
PPF scheme operates on an Exempt-Exempt-Exempt (EEE) model wherein all the investments made towards PPF are deductible under section 80C of the Income Tax Act. The withdrawal made from the account at the time of account closure is also exempt along with the accumulated interest.
Interest earned on the PPF scheme is fully exempt from tax without any limit. Annual investment amount qualifies for tax rebate under Section 80C of Income-tax Act. Contributions to PPF accounts of the spouse and children are also eligible for a tax deduction. Balance in the PPF account is not subject to attachment under any order or decree of a court.
How to check PPF account balance?
PPF account balance can be checked both online and offline. PPF account balance can be checked online only for those investors whose PPF accounts are held with the bank and having internet banking credentials.
For checking the balance offline, you need to visit the bank branch or post office branch and get the PPF passbook updated. The passbook contains, date-wise, details of the investments made, interest credited, and the balance in your account.
Advantages of PPF Account:
Below are a few advantages of a PPF account:
- Investment in PPF enables the investors to claim a tax exemption up to Rs. 1.5 lakhs in a year under section 80C of the Income Tax Act.
- This small savings scheme helps the investors in maintaining a retirement corpus to ensure financial stability post their retirement. Moreover, investors can invest either monthly or lump sum payments towards their investment.
- Additionally, in case of financially difficult times, a loan can be taken against your balance standing in your PPF account. However, this facility is available only from the 3rd year to the 6th year from investment.
- Above all PPF accounts can be extended after the completion of 15 years in a block period of 5 years.
What is the latest PPF Interest Rate?
The current rate of interest on the subscriptions made to the PPF is 7.1 % per annum during the quarter of October to December 2020. The interest rate applicable to the Public Provident Fund is decided by the Ministry of Finance and is liable to change every quarter.
FAQs about PPF rate of interest:
Is interest on PPF taxable?
PPF scheme falls under the EEE (Exempt, Exempt, Exempt) tax category. This means a contribution made towards PPF is allowed as a tax deduction under section 80C of the Income Tax Act and the interest earned thereon is exempt under section 10(11) of the Act.
Why is PPF interest not credited yet?
There is no PPF interest rate calculation date. The interest in your PPF account is calculated every month but is credited at the end of the financial year i.e. 31st March of every financial year. You must check your PPF account balance after this day.
Should I invest monthly or yearly in PPF?
This investment can be made monthly or lump sum. Investing in a PPF scheme monthly or lump sum depends on the liquidity of funds an investor has.
What is the best time to invest in PPF?
The PPF interest is calculated on the lowest balance in the PPF account between the 5th day and the end of the month.
If an investor deposits an amount before the 5th of each month, the investor will get interested for that month on that deposit. Otherwise, the PPF rate of interest is calculated on the previous balance.
