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PPF Interest Rate – Check latest Interest Rates of PPF 2019

Public Provident Fund (PPF) is a government initiated tax saving investment option used by the citizens of India. PPF was introduced in 1986 by the National Savings Institute of the Ministry of Finance with an objective to initiate savings in form of investment along with the benefit of return on it. Public Provident Fund can also be called as savings cum tax saving investment instrument, which enables an individual to create financial cushion in a long-term while saving on annual taxes. . Any and all individuals who are resident citizens of India are completely eligible to have an account opened on their name under the public provident fund and can enjoy the benefits of tax-free returns.

PPF Interest Rate

As of now the current PPF interest rate for July- September 2019  is 7.9% which is compounded annually. Before this, the interest rate was 8% for April-June 2019. The PPF interest rate is set every year by the ministry of finance and is paid each year on 31st March. The PPF interest is calculated by the lowest balance between the end of the fifth and the last day of every month.

In the below mentioned table, one can find the history of Public Provident Fund interest rates since April 2008. It is important to note that the PPF interest rate has fallen from 8.8% to lowest 7.6% on 2018. Let’s take a look at the interest rates on PPF in the past years.

PPF Interest Rate 2011 to 2018

Financial Year PPF Interest Rate(Yearly)
July- September 2019 7.9%
April-June, 2019  8 %
January- March 2019 8%
October- December 2018 8%
July-September 2018 7.6%
April -June 2018 7.6%
January-March 2018 7.6%
October-December 2017 7.8%
July -September 2017 7.8%
April-June, 2017 7.9%
January-March,2017 8.0%
October -December,2016 8.1%
July-September, 2016 8.1%
April-June,2016 8.1%
April 2015-March 2016 8.7%
April 2014-March 2015 8.7% 
April 2013-March 2014April 2012-March 2013 8.7%8.8% 

Benefits of PPF as a Tax Saving Instrument

A PPF is such a scheme that falls under EEE category or Exempt-Exempt-Exempt category. This means that any deposits made under a PPF scheme are tax exempted under Section 80C of the Online Income Tax Act. Also, the entire accumulated amount including the PPF interest rate is completely tax exempted at the time of withdrawal. Under PPF, one can avail the tax exemption U/S 80 C of IT Act up to the maximum limit of Rs.1.5 lakhs. This means that all deposits made to your PPF account can be considered as tax exempted under the same section of the same act.
A PPF account cannot be closed before the completion of its maturity period just like a fixed bank account even though the amount can be transferred between different designated accounts but can never be closed before the completion of the tenure. A PPF account can only be closed prematurely in the event of the death or demise of the account holder. Then in such a situation, the nominee mentioned in the file of the account holder can choose whether or not to close the PPF prematurely or let it reach its maturity period. 

Tips to make the most of your PPF Account

Those who have a PPF account can make the most of it by saving a lot on tax and having great prospects thanks to the high PPF interest rate of 7.9%. Since a PPF account cannot be closed before its maturity period is completed, it acts as a great way to increase overall saving in general too. PPF interest rates provide one of the best options for taxpayers when it comes to saving lump sum amounts on tax. Many already know about the benefits brought about by PPF interest rate but hesitate in taking advantage of them due to the extensively long lock-in period. 15 years might seem too long a period, but if methodically and carefully planned out, the investments made along with the PPF interest rate can act as a booster for extracting as much benefit as possible. Here are a few simple tips which will help any taxpayer make the most out of their PPF:

  • Open an early PPF account: opening a PPF account early can prove to be highly beneficial. Instead of procrastinating and finding the absolute perfect scheme, investing in a PPF early on will help one make the most of the early time. This will help one bank on the PPF interest rate and not waste time in choosing the small formalities thus making the most out of the fund. This will help an individual reach the time of maturity faster and will be able to withdraw money if it is required in the future as the minimum 7 year time limit for emergency withdrawal can pass quickly.
  • Monthly investment in the PPF account: can start making investment in PPF account with a minimum investment of Rs.500 and can invest up to maximum Rs.1.5 lakhs in a financial year. An individual can even give instruction to his/her bank to make monthly transfers into his/her PPF account, and it will be done accordingly till the time of maturity. By giving a onetime instruction, an individual can save up on a lot and PPF interest rates being tax-free, when he/she finally closes the account, he/she will be entitled to entirety make use of the amount with no taxation charges. By choosing the amount one invests each month, he/she can control the amount of expenditure and make the investments according to his/her comfort.
  • Invest in large lump sum amounts: apart from making regular monthly investments in his/her PPF account, it is also beneficial if one makes large amounts of investments altogether. Whenever one gets some extra amount from work or some other sources, try putting some more into his/her PPF account. A little more than usual in the normal monthly investment will help an investor to go a long way. By doing so, one will not feel the pinch of too much cash being locked, and the total amount of maturity keeps on increasing exponentially. Also, due to lump sum investments on a monthly basis, the PPF interest rate will also help in generating more money for an investor to withdraw and consequently one will be able to save even more on the tax. 
    However, as per Section 80C, the maximum amount an individual can keep in his/her PPF account in one financial year is rupees one lakh fifty thousand (rupees 1, 50, 000) only.
  • Careful deposition of monthly money: to make the most out of the PPF interest rate, here is a small trick. Deposit the monthly investments at the start of each month. Previously, banks used to calculate and give interest on the minimum balance between the 10th and the last day of each month. Now that old practice is left behind, and interest is given on a daily basis. Yet, PPF interest rate still follows the traditional method. So, the PPF account will only acknowledge the money deposited before the 5th of each month. So in order to get the best PPF interest rates for the whole month, deposit the investments in the PPF account before the 5th of each month. This will allow an investor to take full advantage of his/her PPF interest rate and enable one to get more when one finally closes his/her account after completion of the maturity time.
  • Using the beginning of the financial year for advantage: often the long lock-in period of a PPF can be troublesome, to say the least. When the lock-in period of one’s investment is this long, even being able to open one’s account a complete year early with the full benefit is advantageous if not anything. In order to get the full benefit of the PPF interest rate, consider opening a PPF account at the beginning of a financial year. This can be done by opening a PPF account within the first 5 days of the financial year which is from 1st April to 5th April of each year. Opening an account before 5th April would cause the calculation of the PPF interest rate to be considered of the investment of the same year.
  • Loans from PPF: normally when people are in need for a loan, they tend to take a personal loan. But, if one has a PPF with a moderate amount in it, then he/she can take a loan against that PPF instead of a personal loan. One may be wondering what benefit that could offer? The most captivating aspect of taking a loan against one’s PPF is the substantially low PPF interest rate against loan. One can take loan against PPF account between the 3rd year and 5th year. The amount of loan can be a maximum of 25% of the 2nd year immediately proceeding the loan application year. In case the first loan is prepaid totally, then one can take second loan before the completion of 6th year. It is always more beneficial to have a flexible loan system which is provided by PPF.
  • Online PPF option: this tip is more of a regularity check so that one does not miss a single moth on investment in order to make the most of his/her PPF interest rate. It is important to make continuous investments so that one can keep increasing his/her monetary pool and reap the maximum benefits of the PPF interest rates and save up on more tax at the time of maturity. Having online facilities to ensure regular updates on the monthly investment help maintaining the streak thus benefitting one in the long run. Not all banks provide online PPF facilities but some like SBI, ICICI, IDBI, and Allahabad Bank offer online PPF services to help its customers get the most out of their PPF interest rate and help them to save up on tax as much as possible. A PPF account holder can even transfer his/her PPF funds to Post Office or other branch or bank through these online means. This spares one from the hassle of having to go to the bank and do the formalities there physically. Instead, an account holder can go about his/her monthly deposit from the comfort of own home or from any place at any time.

PPF account is one of the most beneficial tax-saving facilities available to any taxpayers. PPF interest rates are high and can be carefully used to get the maximum amount of returns when the lock-in period finally ends. By following the tips and tricks mentioned above, anyone can make the most out of a provident fund and have a more financially secure future without any worries.

How to Calculate PPF Account Interest Rate?

A PPF account holder can calculate the PPF interest rate on the least balance in the account between the 5th to the last day of each month. That’s why, in case one wants to deposit a larger sum for any period of time of the year, one should ensure that he/she invest on or prior to the 5th of a certain month so that they can get the benefit of interest on the whole month.

Advantages of PPF Account

Here are a few key advantages of having a PPF account:

  • If one makes a deposit up to Rs. 1 lakh per annum in the PPF Account. The invested amount is liable to be exempted under Income Tax Act’s Section 80C. The contributions one makes towards PPF account of his/her spouse or/and children also qualifies for tax exemption under the Section 80C of the Income Tax Act, 1961.
  • The deduction on tax is also massive up to the interest generated on the PPF account that means the full balance of your PPF account is absolutely exempted from the tax, irrespective of the PPF interest rate. This means that you do not have to pay any tax for return on investment in your PPF.
  • With the help of PPF, an individual can create a retirement corpus for future and ensure to have a financially secured life after retirement.

How to find the Existing PPF Interest Rate?

As of now the current PPF interest rate for July- September 2019 is 7.9% which is compounded annually.. It is accessible online and does not vary throughout the year. Here is what one needs to do in order to check that:

  • A PPF account holder can get hold of the bank or the post office branch to check the current PPF account’s status.
  • If the bank is offering online banking, one can link his/her PPF account to his/her current savings bank account. After getting merged both the accounts, one can access the accounts to check the PPF interest rate and basic functions like making online payments for PPF loans and tracking the status of the account.

One should not get confused between Public Provident Fund (PPF) and Employees Provident Fund (EPF). The PPF and EPF are two different things. PPF is a personal savings account for an individual whose income has not been acquainted via a company or an organization or anyone who is self-employed. Anyone already owning an EPF account can also open this savings investment account. Remember, the PPF interest rate is variable and so does the maturity amount.

Written By: PolicyBazaar - Updated: 26 February 2021
Tax Saving Investment
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