Public Provident Fund (PPF) Account

PPF Account - Quick Overview

A PPF account is a popular long-term saving choice. The PPF full form is Public Provident Fund. It’s a small savings scheme managed by the Department of Economic Affairs (DEA), Ministry of Finance. The department administers the small savings framework and issues notifications determining interest rates for small savings schemes. PPF accounts are operated through authorised post offices and designated banks. It generally follows an Exempt-Exempt-Exempt (EEE) tax treatment, subject to the applicable tax provisions.

PPF Account Benefits & Details

PPF is available with a variety of features such as flexible contribution, PPF tax benefits and defined withdrawal rules. The main PPF account benefits are as follows (last verified October 2026):

PPF Interest Rate History

The Public Provident Fund interest rate has changed over time, from 4.8% at the time of inception to the current rate of 7.1%. The table below shows the PPF interest rate history since inception:

How PPF Interest Is Calculated and How to Maximise It

The PPF Scheme specifies that interest is calculated on the lowest balance standing to the credit of the account between the close of the fifth day and the end of the month. The interest is credited to the account at the end of each financial year.

Since the calculation is based on the balance during this period, deposit timing matters. Depositing before the 5th of a month, especially before 5 April for an annual contribution, allows the amount to earn interest for that month.

PPF Account Opening Process

A PPF account can be opened online through a bank's digital banking platform, or offline at a post office or an authorised bank branch.

1. How to Open a PPF Account Online

   If you already hold a savings account with a bank that offers PPF, you can open the account without visiting a branch.

   1. Log in to your net banking portal or mobile banking app using your savings account credentials.
   2. Go to the investments section and choose the option to open a new PPF account.
   3. Fill in the application form with your personal details and add a nominee.
   4. Complete your KYC through Aadhaar-based eKYC, or upload the required documents.
   5. Transfer the initial deposit from your linked savings account.
   6. Once the deposit is successful, you will receive a confirmation and your PPF account number, which you can view online at any time.

2. How to Open a PPF Account Offline

   You can also open a PPF account at a post office or an authorised bank branch. The process is as follows.

   1. Visit the nearest post office or authorised bank branch that offers PPF accounts.
   2. Ask for Form 1 at the counter, which is the application form for a PPF account.
   3. Fill in your personal details carefully and write the nominee's name in the space provided.
   4. Submit your passport-size photographs along with self-attested copies of your identity and address proofs, such as Aadhaar and PAN. Carry the originals for verification.
   5. Make the first deposit. Branches accept cash or a cheque for the opening amount.
   6. Collect your passbook once the account is confirmed. It carries your PPF account number and records every deposit and the interest credited.

Eligibility Criteria to Open a PPF Account

As per PPF account rules, you can open an account only if you are a resident Indian and if the account is proposed to be formed for an individual or for a minor.

1. Resident Individuals and Minors

   The PPF Scheme permits an individual to open an account in their own name and permits a guardian to open an account on behalf of an eligible minor or person of unsound mind. The account-opening application is made in the prescribed Form-1.

2. Who Cannot Open a PPF Account (NRIs and HUFs)

   The PPF Scheme allows accounts to be opened by eligible resident individuals and by guardians on behalf of eligible minors or persons of unsound mind. NRIs cannot open a new PPF account, and the scheme does not permit HUFs to open a new PPF account.

Documents Required to Open a PPF Account

There are a few basic documents needed to open a PPF account.

1. Properly completed PPF account opening form (Form 1).
2. Identity documents, including Aadhaar card, PAN card, passport, voter ID or driving license.
3. Evidence of address, e.g., Aadhaar card, utility bill or passport.
4. Recent passport-size photograph.
5. Minor's birth certificate, where the account is opened by a guardian.
6. Initial deposit pay-in slip.
7. Nomination information, completed either in Form 1 or by a nomination form.

Premature Closure and Withdrawal Rules

A PPF account may be withdrawn partially before maturity or, in certain situations, closed prematurely, subject to the conditions and schedules stipulated by the PPF Scheme.

1. Partial Withdrawal After the Seventh Year

   Partial withdrawal is allowed after the 7th financial year. The withdrawable amount is limited to 50% of the balance at the end of the fourth preceding financial year, or the preceding year, whichever is lesser. The scheme has an EEE structure wherein a single withdrawal is allowed during a financial year, and there is no penalty on it and it remains completely tax-free.

2. Premature Closure After the Fifth Year

   Premature closure is allowed only after five years have passed from the end of the financial year in which the account was opened. It is also permitted only on specified grounds. These include treatment of a life-threatening disease of the account holder, spouse, dependent children or parents. Higher education of the account holder or dependent children and a change in residency status are the other permitted grounds. On premature closure, the interest payable is reduced by 1% from the rate applicable to the account.

3. Filing Form 3 or Form 5

   When closing a PPF account, select the relevant form depending on whether the account has reached maturity or can be closed prematurely, and send it along with the necessary documents.

   1. Determine whether the request is for maturity or premature closure.
   2. Use Form-3 for maturity closure or Form-5 for premature closure.
   3. Enter the required PPF account and personal details.
   4. Add the documents required for the transaction.
   5. Submit the completed form to the concerned accounts office.
   6. Complete any additional verification required.

Nomination and Transfer of PPF Account

A PPF account may be transferred between banks, post offices or from a bank to a post office without any loss of continuity, interest or tenure. The holder submits a transfer request, with the original passbook, at the current branch. It then sends the certified account details, application, nomination form, and balance to the new institution, where a new KYC update activates the account.

1. Updating a Nominee

   To update the nomination details linked to your PPF account, submit the prescribed request to the bank or post office where the account is maintained.

   1. Check all the current nominee information on record.
   2. Decide whether to add, change or cancel a nomination.
   3. Obtain the prescribed nomination form.
   4. Provide all the required nominee and PPF account details.
   5. Send the completed form to the relevant bank or post office.
   6. Complete any required verification.

2. Transferring Between Bank and Post Office

   You will have to apply for transfer and complete formalities at the receiving office. You may request a transfer from the existing account office.

   1. Select the eligible bank or post office.
   2. Submit the transfer request to the existing office.
   3. Submit the required account and identification documents.
   4. Allow the existing office to verify the account details.
   5. The account records are forwarded to the new office.
   6. Verify that the account is active with the new office.

Loan Against PPF Account

A PPF account holder can take a loan against the balance instead of a premature withdrawal, available from the 3rd to the 6th financial year after opening. The amount is capped at 25% of the balance at the end of the second preceding financial year. After the principal amount of the loan is fully repaid, interest is payable at 1% per annum on the principal amount. If the loan is not repaid, or is only partly repaid, within 36 months, interest on the outstanding loan is charged at 6% per annum as prescribed under the Scheme.

PPF Tax Benefits: Old Regime vs New Tax Regime

PPF contributions are taxed differently under the old and new tax regimes. The basic difference is whether the eligible contribution is tax deductible.

1. Section 123 (Formerly Section 80C) Deduction Under the Old Regime

   The aggregate deduction available under Section 123 of the Income-tax Act, 2025, for specified savings instruments remains capped at ₹1.5 lakh. The eligible instruments have been moved to Schedule XV under the new Act, while the nature of qualifying payments remains substantially unchanged.

2. PPF Tax Treatment Under the New Tax Regime

   The tax deduction available under Section 123 is not available to a taxpayer who opts for the new concessional tax regime. Therefore, the PPF contribution deduction should not be included when calculating deductions under that regime.

Illustration: PPF Maturity Value and Tax Treatment

The example below shows the maturity value of a PPF account where the maximum permissible amount of ₹1.5 lakh is deposited at the start of each financial year (before 5 April) for 15 years, at the current PPF interest rate of 7.1% p.a., compounded annually.

1. Maturity Value Summary

   Particulars	Details
   Annual investment	₹1,50,000
   Investment tenure	15 financial years
   Assumed interest rate	7.1% p.a., compounded annually
   Total amount invested	₹22,50,000
   Total interest earned	₹18,18,209
   Maturity value	₹40,68,209

2. Year-wise Growth Illustration

   Financial Year	Deposit During the Year	Interest Earned	Balance at Year-End
   Year 1	₹150,000	₹10,650	₹160,650
   Year 2	₹150,000	₹22,056	₹332,706
   Year 3	₹150,000	₹34,272	₹516,978
   Year 4	₹150,000	₹47,355	₹714,334
   Year 5	₹150,000	₹61,368	₹925,701
   Year 6	₹150,000	₹76,375	₹1,152,076
   Year 7	₹150,000	₹92,447	₹1,394,524
   Year 8	₹150,000	₹109,661	₹1,654,185
   Year 9	₹150,000	₹128,097	₹1,932,282
   Year 10	₹150,000	₹147,842	₹2,230,124
   Year 11	₹150,000	₹168,989	₹2,549,113
   Year 12	₹150,000	₹191,637	₹2,890,750
   Year 13	₹150,000	₹215,893	₹3,256,643
   Year 14	₹150,000	₹241,872	₹3,648,515
   Year 15	₹150,000	₹269,695	₹4,068,209

Note: The illustration assumes the deposit is made at the start of each financial year, before 5 April, so that the full amount earns interest for that year. Actual returns will vary based on the interest rate notified for each quarter and the exact date of deposit; the 7.1% rate is held constant here for illustration purposes only.

Tax Treatment on Maturity and Withdrawal After 15 Years

PPF follows an Exempt-Exempt-Exempt (EEE) tax structure. Each stage of this illustration is taxed as follows, subject to the applicable provisions of the Income-tax Act, 2025:

Contribution stage: The ₹1.5 lakh deposited each year is eligible for a deduction under Section 123 read with Schedule XV, within the overall ₹1.5 lakh annual cap. This deduction is available only under the old tax regime and cannot be claimed under the new concessional tax regime.

Accumulation stage: The interest credited each year (₹18,18,209 in total over 15 years, per this illustration) is fully exempt from tax and does not need to be reported as taxable income in any year.

Maturity/withdrawal stage: The entire maturity value of ₹40,68,209 is fully tax-free when withdrawn after the completed 15-year tenure. There is no TDS and no tax liability on this amount.

Estimate Returns Using PPF Calculator

A PPF calculator uses the planned contribution, investment period and an assumed interest rate to estimate the potential maturity value. Instead of doing calculations through compounding, you can enter the deposit amount or tenure in the calculator to compare results and plan how much to invest annually to reach your target corpus. Over 15 years, annual compounding at the current PPF interest rate can help establish a considerable corpus from monthly contributions, making it a good investment plan.