PPF Account Rules 2026: Interest Rate, Withdrawals and Taxation

If you want a savings option where the government guarantees both the rate and the safety of your money, the Public Provident Fund (PPF) is still the benchmark. It pays 7.1% per annum as of 2026, runs for 15 years, and every rupee of interest and maturity value comes back tax-free. This guide covers every rule that matters: deposits, interest, loans, withdrawals, extensions and eligibility.

Who Can Open a PPF Account

Only resident individuals are eligible. Hindu Undivided Families (HUFs) and non-resident Indians (NRIs) cannot open a PPF account, though an account opened while resident can simply continue if the holder’s status changes later. The eligibility rules are strict on numbers too.

• One person can hold only one PPF account in their own name; a guardian can additionally open one account for a minor child.
• Accounts can be opened at SBI, post offices and most major banks, either by visiting a branch or through net and mobile banking.
• The account must receive at least ₹500 in a financial year to stay active.

Interest Rate: 7.1% as of 2026

The PPF rate is notified by the Ministry of Finance every quarter, like all small savings schemes. It has been held at 7.1% per annum since the January–March 2024 quarter, so the rate stands at 7.1% as of 2026. Interest compounds annually and is credited at the end of each financial year. The calculation runs on the lowest balance between the 5th and the last day of each month, which means a deposit placed before the 5th earns interest for that full month while one placed after earns only from the next month.

Deposit Rules: ₹500 to ₹1.5 Lakh a Year

You can deposit anywhere between ₹500 and ₹1.5 lakh in a financial year, either as a single lump sum or in up to 12 instalments. Deposits are required only for the first 15 years, which is the full original tenure. Anything deposited above the ₹1.5 lakh ceiling earns no interest and is refunded, so it pays to fix the yearly amount before funding the account. Because each deposit qualifies for the section 80C deduction, many savers time contributions with their tax planning; the section 80C deduction planner helps you split the ₹1.5 lakh limit across eligible instruments.

Loans and Partial Withdrawals Before Maturity

Liquidity is limited by design, but the scheme does provide two escape valves. Between the third and sixth years, you can borrow against the account — a loan of up to 25% of the balance that stood two financial years before the year of application, repayable in instalments. From the seventh year onwards, you can instead take a partial withdrawal, capped at 50% of the balance from the applicable earlier reference year, once per financial year. Using the withdrawal window does not close the account, and the withdrawn amount is never repaid. Together these windows make a 15-year commitment workable in a genuine emergency without surrendering the tax-free status of the rest of the corpus.

Maturity and Extension in 5-Year Blocks

The account matures 15 years from the end of the financial year in which it was opened, and the entire balance is paid out tax-free. At that point you can close and withdraw everything, or extend the account in blocks of 5 years, with or without fresh contributions.

• Extension with contribution: you keep depositing each year and the loan and withdrawal rules continue much as before, including the ₹1.5 lakh annual cap.
• Extension without contribution: no new deposits are needed; the balance keeps earning the notified rate, and one withdrawal per financial year is allowed. Any partial withdrawal in this mode reduces the interest-earning balance permanently.

The extension request should reach the bank or post office before the account matures. Many retirees use the without-contribution mode as a safe, tax-free parking slot that still beats most fixed deposits.

Tax Benefits: The Full EEE Treatment

PPF enjoys EEE status — exempt at entry, exempt while growing and exempt at exit.

• The yearly deposit qualifies for the section 80C deduction of up to ₹1.5 lakh, which is available only if you opt for the old tax regime.
• The 7.1% interest accrues tax-free every year — there is nothing to report as income.
• The maturity proceeds are tax-free as well, with the exemption flowing from the PPF Act itself rather than from yearly budget amendments.

Note the nuance: only the 80C deduction depends on choosing the old regime. The tax-free interest and tax-free maturity survive under the new regime too, because those exemptions do not flow through the deduction chapter. The deduction framework itself carries forward under the Income-tax Act, 2025, effective from 1 April 2026, so the EEE structure remains intact for contributions made going forward.

How PPF Sits Among Small Savings Options

Among government-backed small savings schemes, PPF occupies the middle ground: more flexible than the Sukanya Samriddhi Yojana, which pays a higher rate but is restricted to a girl child, and far more tax-efficient than taxable time deposits. If you are saving for a daughter, compare the two schemes directly — our Sukanya Samriddhi calculator mirrors the PPF working for side-by-side maturity values. To project PPF balances year by year at the current rate, use the PPF calculator.

Key Takeaways

• Interest is 7.1% per annum as of 2026, notified quarterly and unchanged since the January–March 2024 quarter.
• Deposit ₹500 to ₹1.5 lakh a year; one account per resident individual, HUFs and NRIs not eligible.
• Loan available in years 3 to 6; partial withdrawal from the 7th year.
• Matures in 15 years; extension possible in 5-year blocks with or without contribution.
• Fully EEE: 80C deduction (old regime), tax-free interest and tax-free maturity.

Frequently Asked Questions

Can an NRI open a PPF account?

No. PPF is open only to resident individuals, and HUFs are not eligible either. An account opened while the person was a resident can continue until maturity after the holder becomes an NRI.

What happens if I deposit more than ₹1.5 lakh in a year?

Excess deposits earn no interest and are refunded by the bank or post office. Keep total funding within the ₹1.5 lakh annual ceiling to avoid the hassle.

Can I close my PPF account before 15 years?

Premature closure is permitted only after five completed years on specified grounds such as medical treatment or higher education, and the interest rate is reduced by 1%. Loans and partial withdrawals are usually the better first options.

How is PPF interest credited?

Interest accrues monthly on the lowest balance between the 5th and the last day of the month and is credited once, at the end of the financial year. Deposits made before the 5th of a month earn for that month.

Can I continue PPF after 15 years?

Yes, in blocks of 5 years, with or without fresh contributions. In the without-contribution mode the balance keeps earning the notified rate and one withdrawal per financial year is allowed.

Disclaimer: Tax laws change frequently. Verify current rates and deadlines on the official portals (incometax.gov.in, gst.gov.in) or consult a qualified professional before acting.