PPF Complete Guide 2026: Returns, Extension, Withdrawal and Loan Rules
Last updated: 21 October 2026
Quick answer (PPF Complete Guide): PPF (Public Provident Fund) is a 15-year, government-backed savings scheme paying 7.1% a year for October–December 2026, with interest and maturity completely tax-free. You can deposit ₹500 to ₹1.5 lakh a year. Partial withdrawals are allowed from the seventh year, loans from the third, and after 15 years you can withdraw everything or extend in five-year blocks.
Last updated: 21 October 2026 Quick answer (PPF Complete Guide): PPF (Public Provident Fund) is a 15-year, government-backed savings scheme paying 7.1% a year for October–December 2026, with interest and maturity completely tax-free. You can deposit ₹500 to ₹1.5 lakh a year. Partial withdrawals are allowed from the seventh year, loans from the third, and after 15 years you can withdraw everything or extend in five-year blocks. Key takeaways Rate: 7.1% for October–December 2026, unchanged since April 2020 and reviewed every quarter. Returns: ₹1.5 lakh a year grows to about ₹40.7 lakh in 15 years and ₹1.03 crore in 25 years. The 5th rule: deposit by the 5th of the month, ideally by 5 April, to earn interest for that month. Liquidity: loans in years 3–6; one partial withdrawal a year from year 7, capped at 50% of a reference balance. Tax: interest and maturity are tax-free; the deposit deduction (now section 123) is old-regime only. Ask a room of Indian investors which product they trust most, and PPF usually wins. It has no market risk, no credit risk and no tax on the way out. Yet most account holders leave money on the table, by depositing in March instead of April, by not knowing they can borrow against it, or by letting it lapse at maturity without a plan. This guide covers how PPF returns are calculated, what ₹1.5 lakh a year really becomes, every rule on loans, withdrawals and premature closure, how to extend your account, the October 2024 rules on irregular accounts, and where PPF fits next to ELSS, NPS and FDs. PPF Complete Guide: What is PPF and how does it work? The Public Provident Fund is a long-term savings account run by the Government of India under the Public Provident Fund Scheme, 2019, which replaced the original 1968 scheme. You can open it at any post office or at authorised banks, including SBI, other public sector banks and several private banks. Feature Rule (as of October 2026) Interest rate 7.1% a year (October–December 2026), compounded annually Deposit Minimum ₹500, maximum ₹1.5 lakh per financial year, in multiples of ₹50 Maturity 15 complete financial years after the year of opening Who can open Resident Indians, one account each, plus an account for a minor as guardian Not allowed Joint accounts; new accounts by NRIs or HUFs Loan From year 3 to year 6 Partial withdrawal Once a year from year 7 Tax Interest and maturity tax-free; deposit deductible in the old regime only Missing the ₹500 minimum in any year makes the account "discontinued". You can revive it by paying ₹50 as a penalty for each missed year, along with the ₹500 minimum for each of those years. Until then, you cannot take a loan or withdraw. How is PPF interest calculated? PPF interest is worked out every month on the lowest balance between the close of the 5th day and the end of that month. It is added to your account once a year, on 31 March. That is why the timing of your deposit matters so much. A deposit made on or before the 5th earns interest for that month. A deposit made on the 6th earns nothing until the next month. The rate itself is reset every quarter. It applies to your entire balance, not just new deposits, so PPF is not a fixed-rate product. The current small savings rate table (/insights/small-savings-interest-rates-oct-dec-2026) shows how it compares with other schemes. How much will PPF give you? Returns on ₹1.5 lakh a year Here is what different annual deposits become at 7.1%, assuming each year's deposit is made by 5 April and the rate stays constant. In reality the rate will change over 15 years, so treat these as estimates. Yearly deposit Total invested (15 yrs) Value after 15 years Interest earned (tax-free) ₹12,000 (₹1,000 a month) ₹1.8 lakh ₹3.25 lakh ₹1.45 lakh ₹50,000 ₹7.5 lakh ₹13.56 lakh ₹6.06 lakh ₹1,00,000 ₹15 lakh ₹27.12 lakh ₹12.12 lakh ₹1,50,000 ₹22.5 lakh ₹40.68 lakh ₹18.18 lakh The real power shows in the later years. On ₹1.5 lakh a year, the interest credited in year 1 is ₹10,650. By year 10 it is about ₹1.48 lakh, and by year 15 about ₹2.7 lakh, which exceeds your annual deposit. Line chart of PPF balance growing to ₹40.7 lakh in 15 years and ₹1.03 crore in 25 years with ₹1.5 lakh a year at 7.1% What if the PPF rate changes? Because the rate is reset quarterly, your final corpus depends on the path of rates. At an average of 6.5%, ₹1.5 lakh a year becomes about ₹38.6 lakh in 15 years. At 7.5% it becomes about ₹42.1 lakh, and at 8% about ₹44 lakh. The range is narrow because the bulk of the corpus is your own deposits plus early compounding. Does it matter when you deposit in PPF? Yes, and by more than most people expect. Investing ₹1.5 lakh as a lump sum by 5 April each year gives the full year's interest on that money. Depositing in March, as many do for last-minute tax saving, earns interest for only one month in that year. Deposit pattern (₹1.5 lakh a year, 15 years) Maturity value Shortfall vs best case Lump sum on or before 5 April ₹40.68 lakh — Lump sum on 6 April ₹40.46 lakh ₹22,000 ₹12,500 on or before the 5th of every month ₹39.45 lakh ₹1.24 lakh Lump sum every March ₹38.21 lakh ₹2.47 lakh Bar chart showing PPF maturity value by deposit timing: early April lump sum, monthly, 6 April and March deposits If a lump sum is not possible, set up a standing instruction for the 1st to 4th of each month. Salaried readers who get paid on the last working day can schedule it for the 2nd or 3rd. Missing the 5th by a single day costs a month of interest on that instalment. PPF withdrawal rules: partial withdrawal, loans and premature closure PPF is less locked than its 15-year tenure suggests. There are three ways to reach your money early, each with its own window. In the rules below, "year 1" means the financial year in which you opened the account. PPF account timeline showing loan, partial withdrawal, premature closure, maturity and extension rules by year Partial withdrawal from year 7 You can make one withdrawal per financial year once five years have passed from the end of the year of opening, which means from year 7. The limit is 50% of the lower of two balances: the balance at the end of the fourth year before the withdrawal year, or the balance at the end of the year just before it. Worked example: you opened the account in FY 2020-21 and have deposited ₹1.5 lakh every April. In FY 2026-27 (year 7), the reference balances are the end of year 3 (about ₹5.17 lakh) and the end of year 6 (about ₹11.52 lakh). You can withdraw up to 50% of ₹5.17 lakh, about ₹2.58 lakh. Withdrawals are tax-free and do not need to be repaid. Loan against PPF in years 3 to 6 From year 3 until the end of year 6, you can borrow up to 25% of the balance at the end of the second year before the year you apply. In year 3, that means 25% of the year-1 balance: on ₹1.5 lakh a year, about ₹40,000. Under the 2019 scheme, the loan costs 1% a year above the PPF rate (currently 8.1%) if repaid within 36 months. If it is not repaid within 36 months, the extra charge rises from 1% to 6% a year, so confirm the exact terms with your account office before borrowing. A second loan is possible only after the first is fully repaid. It is a cheap source of short-term money compared with a personal loan, but it also stops that money compounding at 7.1% tax-free. Our comparison of personal loans, loans against mutual funds and gold loans (/insights/personal-loan-vs-lamf-vs-gold-loan) covers the alternatives. Premature closure after five years You can close a PPF account before maturity only after five complete financial years, and only for specific reasons: treatment of a life-threatening disease of the account holder, spouse, dependent children or parents; higher education of the account holder or dependent children; or a change in residency status, such as moving abroad. The penalty is that interest for the whole period is recalculated at 1% less than the rates that applied. On ₹1.5 lakh a year closed after six years, that reduces the balance from about ₹11.52 lakh to ₹11.13 lakh, a cost of roughly ₹39,000. What happens when PPF matures? Extension options A PPF account matures after 15 complete financial years from the end of the year in which it was opened. An account opened in July 2026 (FY 2026-27) therefore matures on 1 April 2042, and you can make deposits in 16 financial years. At maturity you have three choices. Close and withdraw the full balance. The entire amount is tax-free. Extend with deposits for a five-year block by submitting the extension form at your post office or bank within one year of maturity. You can keep investing up to ₹1.5 lakh a year and withdraw up to 60% of the balance at the start of the block over its five years, in one withdrawal per year. Extend without deposits. If you do nothing, the account continues automatically without fresh deposits. The balance keeps earning the PPF rate, and you can withdraw any amount, once a year. Comparison of PPF extension with deposits versus without deposits after 15 years The extension decision matters more than it looks. If you missed the one-year window for the form, you are on the no-deposit route for that block and cannot switch. If you want to keep investing, file the form in the first few months after maturity. There is no limit on how many five-year extensions you can take, so a PPF account can run for decades. One trap to avoid: if you keep depositing after maturity without filing the extension form (Form H, called Form 4 under the 2019 PPF rules), those deposits are treated as irregular. They earn no interest and do not qualify for the deduction, so you would only get the principal back. ₹1.5 lakh a year for… Total invested Value at 7.1% 15 years ₹22.5 lakh ₹40.68 lakh 20 years (one extension) ₹30 lakh ₹66.58 lakh 25 years (two extensions) ₹37.5 lakh ₹1.03 crore 30 years (three extensions) ₹45 lakh ₹1.55 crore The no-deposit route also works well in retirement. A ₹40.68 lakh balance earns about ₹2.89 lakh a year at 7.1%, and you can withdraw roughly that amount each year, tax-free, while the principal stays intact. Our retirement income strategy guide (/insights/retirement-income-strategy-india) shows how this fits with SWPs and annuities. PPF for minors, NRIs and the October 2024 irregular-account rules A parent or legal guardian can open a PPF account for a minor child. Deposits in the guardian's own account and the minor's account together count towards the single ₹1.5 lakh annual limit. When the child turns 18, the account converts to the child's own name with fresh KYC. The Ministry of Finance issued guidelines effective 1 October 2024 to regularise accounts opened against the rules, as Business Standard explained (https://www.business-standard.com/finance/personal-finance/minor-s-account-to-nris-new-ppf-changes-from-october-2024-decoded-124100900103_1.html) : Irregular minor accounts earn only the post office savings rate (4%) until the child turns 18, and the 15-year maturity is counted from that date. More than one account in your name: the primary account earns the PPF rate within the ₹1.5 lakh limit. A second account's balance is merged into it, with any excess returned without interest. Further accounts earn nothing. NRIs cannot open new PPF accounts. An account opened while resident can be held until maturity, but extensions by NRIs are not permitted. Certain old NRI accounts lost interest altogether after 30 September 2024. If you have two PPF accounts, perhaps one opened at a bank and one at a post office years ago, approach the account office to merge them. For NRIs planning their Indian savings, see our NRI taxation guide (/insights/nri-taxation-india-guide) . How is PPF taxed under the Income-tax Act 2025? PPF has "EEE" status: exempt on deposit, exempt on interest, exempt on withdrawal. The Income-tax Act, 2025, which replaced the 1961 Act from 1 April 2026, kept this treatment but renumbered the deduction. The old section 80C is now section 123, with the same ₹1.5 lakh overall cap. Old regime: your PPF deposit reduces taxable income, within the ₹1.5 lakh section 123 limit shared with EPF, ELSS, life insurance premiums and others. New regime: no deduction for the deposit, but interest and maturity remain tax-free. Reporting: show PPF interest as exempt income in your return; it is not taxable even above any threshold, unlike EPF interest on high contributions. For a 31.2% taxpayer, 7.1% tax-free is worth about 10.3% from a taxable deposit. Even with no deduction, that beats bank FDs, which pay around 6.25% to 6.50% at big banks after the October 2026 rate hike. Is PPF worth it in 2026? PPF vs ELSS vs FD vs NPS PPF is excellent for what it does: guaranteed, tax-free compounding with no default risk. It is not built to beat inflation by a wide margin. With CPI inflation at 5.54% in September 2026, PPF's real return is about 1.5% a year. PPF ELSS fund Bank FD (5-yr) NPS Tier I Return 7.1% (reset quarterly) Market-linked About 6–6.5% at big banks Market-linked Risk Sovereign, none Equity risk Low; DICGC to ₹5 lakh Mixed equity/debt Lock-in 15 years (partial access from year 7) 3 years 5 years for tax-saver FD Until retirement, with rules Tax on returns Exempt 12.5% LTCG above ₹1.25 lakh Slab rate Partly exempt at exit A sensible approach is to use PPF as the debt anchor of a long-term portfolio, alongside equity for growth. Our detailed comparison of PPF vs ELSS vs SIP (/insights/ppf-vs-elss-vs-sip-which-tax-saving-investment-actually-wins-in-2026) and the NPS vs mutual funds guide (/insights/nps-vs-mutual-funds-complete-comparison-guide) go further. If you are saving for a daughter, compare PPF with Sukanya Samriddhi (/insights/sukanya-samriddhi-yojana-guide) , which pays 8.2%. How to open a PPF account: step by step Choose the account office: a post office or an authorised bank. Submit the account opening form with PAN, Aadhaar, a photograph and address proof. Make the first deposit of at least ₹500, by cash, cheque or online transfer. Register a nominee at opening. You can change it later. Link it to net banking and set up a standing instruction for the 1st to 4th of April, or of each month. Diarise year 7 and maturity so you know when withdrawal and extension options open. Related reading Small Savings Interest Rates for October–December 2026 (/insights/small-savings-interest-rates-oct-dec-2026) PPF vs ELSS vs SIP: Which Tax-Saving Investment Wins? (/insights/ppf-vs-elss-vs-sip-which-tax-saving-investment-actually-wins-in-2026) NSC and Kisan Vikas Patra Explained (/insights/nsc-kisan-vikas-patra-guide) EPF and VPF: Rules, Withdrawals and Tax in 2026 (/insights/epf-vpf-rules-withdrawal-tax-2026) Tax Planning FY 2026-27: Old vs New Regime (/insights/tax-planning-guide-india) Can PPF fund a ₹1 lakh monthly income in retirement? Recent news stories describe PPF giving a "₹1 lakh monthly pension for 20 years with over ₹1 crore left". The maths behind it holds up, but PPF itself does not pay a pension, and the headline skips inflation and tax. Here is what the numbers actually show. ₹1.5 lakh deposited at the start of every financial year, 7.1% a year assumed for the whole period (the rate for October–December 2026). PPF rates are reset every quarter, so actual balances will differ. Years of deposits Estimated balance 15 years (maturity) ₹40.7 lakh 20 years (one extension) ₹66.6 lakh 25 years (two extensions) ₹1.03 crore 30 years (three extensions) ₹1.55 crore Two ways to draw an income from the ₹1.55 crore: Stay inside PPF. After maturity the account can be extended in five-year blocks. If it is extended without fresh deposits, one withdrawal of any amount is allowed each financial year and the balance keeps earning tax-free interest. Withdrawing ₹12 lakh at the start of every year (₹1 lakh a month on average) would still leave about ₹76 lakh after 20 years at 7.1%. If the yearly withdrawal is raised by 6% for inflation, the money lasts about 13 years. Move it out. The news example shifts the corpus into a systematic withdrawal plan earning an assumed 7%. A flat ₹1 lakh a month for 20 years would leave about ₹90 lakh, and a flat ₹1 lakh lasts about 30 years in total. Unlike PPF, the returns are not guaranteed, and interest or gains outside PPF are taxable. The inflation check: someone who starts at 30 and draws income from 60 is spending money 30 years from now. At 6% inflation, ₹1 lakh then buys what about ₹17,400 buys today (about ₹23,100 at 5% inflation). PPF is a strong, safe, tax-free building block, but for most families it works best alongside growth assets rather than as the whole retirement plan. Extension rules in brief: to keep depositing after 15 years, the extension form must be submitted within one year of maturity; with deposits, withdrawals during each five-year block are limited to 60% of the balance at the start of that block, once a year. Without that form, the account can stay open after maturity without fresh deposits, under the one-withdrawal-a-year rule above; deposits made without a valid extension earn no interest. Frequently Asked Questions What is the PPF interest rate in 2026? The PPF interest rate is 7.1% a year for October–December 2026, as notified by the Ministry of Finance on 30 September 2026. It has stayed at 7.1% since April 2020. The rate is reviewed every quarter and applies to your whole balance, so it can change in January 2027. Interest is compounded and credited annually on 31 March. How much will I get if I invest ₹1.5 lakh a year in PPF for 15 years? At 7.1%, depositing ₹1.5 lakh by 5 April every year for 15 years gives about ₹40.68 lakh. You invest ₹22.5 lakh and earn about ₹18.18 lakh in tax-free interest. If you extend for two five-year blocks and keep investing, the balance crosses ₹1 crore after 25 years. Can I withdraw money from PPF before 15 years? Yes, partially. From the seventh financial year, you can make one withdrawal a year of up to 50% of the lower of the balance at the end of the fourth preceding year or the preceding year. Full closure before maturity is allowed only after five years, for serious illness, higher education or a change of residency, with 1% less interest. What is the last date to deposit in PPF to earn interest for the month? Deposit on or before the 5th of the month. PPF interest is calculated on the lowest balance between the 5th and the last day of each month, so money that arrives on the 6th earns nothing for that month. To earn the full year's interest, deposit your annual amount by 5 April. Is PPF interest taxable under the new tax regime? No. PPF interest and maturity amounts are tax-free under both the old and new regimes. What the new regime removes is the deduction for your deposit, which under the Income-tax Act 2025 sits in section 123 (formerly 80C). In the old regime, PPF deposits qualify within the ₹1.5 lakh limit. Can an NRI continue a PPF account? An NRI cannot open a new PPF account. If you opened one while resident, you can keep it and continue until maturity, but you cannot extend it after 15 years. Under the October 2024 guidelines, extended accounts of NRIs are treated as irregular. Change of residency is also one of the permitted grounds for premature closure after five years. Can I have two PPF accounts? No. An individual can hold only one PPF account in their own name, plus accounts for minors as guardian. Under rules effective 1 October 2024, a second account's balance is merged into the primary account within the ₹1.5 lakh yearly limit, any excess is refunded without interest, and further accounts earn no interest. Sources: Department of Posts SB Order 12/2026 (https://utilities.cept.gov.in/dop/pdfbind.ashx?id=15533) ; DEA office memorandum, 30 Sep 2026 (via TaxGuru) (https://taxguru.in/finance/small-savings-interest-rates-unchanged-october-december-2026.html) ; Business Standard on October 2024 PPF rules (https://www.business-standard.com/finance/personal-finance/minor-s-account-to-nris-new-ppf-changes-from-october-2024-decoded-124100900103_1.html) ; BasuNivesh on irregular PPF accounts (https://www.basunivesh.com/new-ppf-and-ssy-rules-effective-from-1st-october-2024/amp/) ; Income Tax Department, Schedule II (exempt incomes) of the Income-tax Act 2025 (https://www.incometaxindia.gov.in/w/schedule-ii-9) ; The Week, April 2020 rate cut (https://www.theweek.in/news/biz-tech/2020/04/01/ppf-other-small-savings-schemes-to-fetch-lower-returns-from-today-check-revised-rates-here.amp.html) . Worked examples are Money n Wealth calculations. Should PPF be a bigger or smaller part of your plan? The right PPF allocation depends on your tax regime, EPF balance and equity exposure, and getting it right compounds for decades. Talk to Money n Wealth (/contact) for a free portfolio review. This article is for general educational purposes only and does not constitute financial advice. Figures and examples are illustrative. Please consult a qualified financial adviser for guidance specific to your situation. Money n Wealth (Predics Fintech Services Pvt Ltd) is an AMFI-registered Mutual Fund Distributor (ARN-121995) and APMI-registered PMS Distributor (APRN07444); it is not a SEBI-registered investment adviser and may earn distribution commission on investments made through it.
Frequently Asked Questions
What is the PPF interest rate in 2026?
The PPF interest rate is 7.1% a year for October–December 2026, as notified by the Ministry of Finance on 30 September 2026. It has stayed at 7.1% since April 2020. The rate is reviewed every quarter and applies to your whole balance, so it can change in January 2027. Interest is compounded and credited annually on 31 March.
How much will I get if I invest ₹1.5 lakh a year in PPF for 15 years?
At 7.1%, depositing ₹1.5 lakh by 5 April every year for 15 years gives about ₹40.68 lakh. You invest ₹22.5 lakh and earn about ₹18.18 lakh in tax-free interest. If you extend for two five-year blocks and keep investing, the balance crosses ₹1 crore after 25 years.
Can I withdraw money from PPF before 15 years?
Yes, partially. From the seventh financial year, you can make one withdrawal a year of up to 50% of the lower of the balance at the end of the fourth preceding year or the preceding year. Full closure before maturity is allowed only after five years, for serious illness, higher education or a change of residency, with 1% less interest.
What is the last date to deposit in PPF to earn interest for the month?
Deposit on or before the 5th of the month. PPF interest is calculated on the lowest balance between the 5th and the last day of each month, so money that arrives on the 6th earns nothing for that month. To earn the full year's interest, deposit your annual amount by 5 April.
Is PPF interest taxable under the new tax regime?
No. PPF interest and maturity amounts are tax-free under both the old and new regimes. What the new regime removes is the deduction for your deposit, which under the Income-tax Act 2025 sits in section 123 (formerly 80C). In the old regime, PPF deposits qualify within the ₹1.5 lakh limit.
Can an NRI continue a PPF account?
An NRI cannot open a new PPF account. If you opened one while resident, you can keep it and continue until maturity, but you cannot extend it after 15 years. Under the October 2024 guidelines, extended accounts of NRIs are treated as irregular. Change of residency is also one of the permitted grounds for premature closure after five years.
Can I have two PPF accounts?
No. An individual can hold only one PPF account in their own name, plus accounts for minors as guardian. Under rules effective 1 October 2024, a second account's balance is merged into the primary account within the ₹1.5 lakh yearly limit, any excess is refunded without interest, and further accounts earn no interest.
Should PPF be a bigger or smaller part of your plan?
The right PPF allocation depends on your tax regime, EPF balance and equity exposure, and getting it right compounds for decades. Talk to Money n Wealth for a free portfolio review.
