PPF Rules Explained: Deposit Limit, Interest, Tenure, Loan & Partial Withdrawal

Public Provident Fund (PPF) is still one of the cleanest long-horizon, sovereign-backed savings options for resident individuals — especially if you want EEE-style tax treatment under the old tax regime’s Section 80C umbrella and a fixed, government-notified rate. This guide explains current PPF rules with verified numbers: deposit ceiling, how interest is calculated, tenure, loan and withdrawal, and what happens if you miss the yearly minimum.

Primary scheme text is maintained by National Savings / India Post frameworks — see the NSI Public Provident Fund scheme page. Interest for the July–September 2026 quarter was kept unchanged at 7.1% p.a. compounded yearly, per the Finance Ministry’s small-savings rate OM (F.No.1/4/2019-NS dated 30.06.2026) as reflected in India Post SB Order 07/2026 and summarised in mainstream coverage such as TOI’s Q2 FY 2026-27 small-savings round-up.

For salary-side context while you plan 80C, see how to read a salary slip. For EPFO changes that affect take-home, see EPFO wage ceiling ₹25,000. For bank deposit disclosure updates, see RBI FD rules 2026.

What is PPF and who can open an account?

PPF is a 15-year small-savings scheme of the Government of India, offered through banks and Post Offices under the same scheme rules. It is meant for resident individuals. You can open an account in your own name; a guardian may open an account on behalf of a minor. Non-resident status after account opening has specific continuation rules — check the live scheme text and your bank before assuming NRI eligibility for new accounts.

Only one PPF account in your own name is the standard discipline (plus the minor account you may operate as guardian, subject to the combined deposit ceiling discussed below).

Minimum & maximum deposit every financial year

Under the NSI Public Provident Fund Scheme rules:

• Minimum: ₹500 per financial year
• Maximum: ₹1,50,000 per financial year
• Deposits in multiples of ₹50

The ₹1.5 lakh annual ceiling is a combined cap: deposits in your own account plus deposits you make in an account opened on behalf of a minor count together toward ₹1,50,000 in that financial year.

You may deposit in lump sum or in instalments, as long as you stay inside the annual cap. Missing the ₹500 minimum is a default — revival rules are covered later.

Illustrative teaching arithmetic: if you put ₹1,20,000 in your PPF and ₹40,000 in your child’s PPF in the same FY, you have used ₹1,60,000 on paper — but the combined ceiling is ₹1,50,000, so the excess is not a valid scheme deposit. Plan household PPF funding as one ₹1.5 lakh bucket.

Current interest rate and how interest is calculated

For the quarter July–September 2026, PPF interest is 7.1% per annum, compounded yearly (MoF OM dated 30.06.2026 / India Post SB Order 07/2026). Small-savings rates are notified quarterly — always re-check the latest MoF OM for later quarters rather than assuming 7.1% forever.

Interest calculation nuance that savers forget:

• Interest for a month is calculated on the lowest balance between the close of the 5th day and the end of that month
• Interest is credited at the end of the financial year

Practical tip: if you want a deposit to earn interest for that month, get it in so that it sits in the account by the 5th (scheme-calculation logic). A deposit on the 20th typically starts helping from the following month’s lowest-balance window. This is why the “deposit before the 5th” calendar habit exists among serious PPF investors.

Illustrative (labelled teaching only): suppose your lowest balance between close of 5th and month-end is ₹2,00,000 for each of 12 months and the notified rate is 7.1% p.a. compounded yearly. A rough annual interest illustration is ₹2,00,000 × 7.1% = ₹14,200 for that year if that balance profile held — real accounts vary month to month; the FY credit follows scheme rules, not this napkin math.

Tenure — 15 years and extensions in 5-year blocks

Account tenure is 15 financial years under the scheme rules. After maturity, you can extend in 5-year blocks with or without fresh deposits, subject to the extension option you choose at the bank / Post Office. Extension paperwork deadlines matter — miss them and you may land in a different post-maturity treatment. Ask the branch which form / e-option applies before the 15th year ends.

Deposits can continue across the 15 years within each FY’s ₹1.5 lakh cap. You do not have to deposit the maximum every year; you must meet the minimum to avoid default.

Loan against PPF and partial withdrawal rules

PPF is illiquid by design, but not totally locked:

• Loan against PPF: available in a window in the early years of the account (scheme text specifies from which year to which year). Loan is a percentage of the balance at the end of a prior year — confirm the exact percentage and eligible years on the live NSI / bank circular before you apply.
• Partial withdrawal: allowed from a later year of the account’s life (commonly framed from the 7th financial year onwards in scheme explainers), subject to percentage-of-balance caps and documentation your bank asks for.

Because loan and withdrawal percentages are technical and occasionally clarified by SB Orders, treat the NSI scheme page and your account passbook / statement as the source of truth — not social-media “you can take 50% anytime” posts.

Tax treatment (80C / EEE framing)

PPF is classically taught as an EEE product under the old tax regime narrative:

• Exempt contribution side via Section 80C (subject to the overall ₹1.5 lakh 80C basket and your regime choice)
• Exempt interest as it accrues (as per prevailing Income-tax treatment for PPF interest)
• Exempt maturity proceeds under the long-standing PPF tax framing

If you opt for the new tax regime, 80C benefits generally do not apply the same way — PPF can still be a pure savings vehicle, but the “tax-saving” pitch weakens. Confirm current Income-tax Act sections and Finance Act changes for the year you file; this article does not replace a tax adviser’s computation.

Salary earners should map PPF deposits against EPF and other 80C uses while reading the PF line on the slip — start with Salary Slip Kaise Padhein.

Premature closure & default (missed ₹500) revival

Default: if you fail to deposit the minimum ₹500 in a financial year, the account becomes irregular / defaulted under scheme practice. Revival typically requires paying the minimum deposit for the defaulted year(s) along with a prescribed penalty / fee as per scheme rules at the time of revival. Do this at the same bank / Post Office that holds the account and get the passbook updated.

Premature closure: allowed only in prescribed situations (for example certain medical or higher-education conditions, or after a minimum lock-in as per scheme text), often with an interest-rate penalty versus the notified rate. Do not break PPF casually for a short-term cash need — use an emergency fund or, if eligible, the loan window instead.

PPF vs EPF vs NPS — quick positioning

• EPF: employment-linked, employer share, wage-ceiling dynamics (see our EPFO wage ceiling piece). Good automatic saver for salaried staff.
• PPF: voluntary, sovereign small-savings, hard FY ceiling ₹1.5 lakh, 15-year core tenure, currently 7.1% for Jul–Sep 2026 quarter.
• NPS: market-linked retirement with Tier I / Tier II structure and different tax / withdrawal rules — use when you want equity/debt mix under PFRDA, not a fixed small-savings rate.

Many households run EPF + PPF together: EPF from salary, PPF for additional sovereign fixed-rate savings up to the 80C / cashflow limit.

Bank vs Post Office — same scheme rules

Whether you open at SBI, another authorised bank, or India Post, the scheme rules (min/max, interest calculation logic, tenure) are national. What differs is service quality: online deposit convenience, e-passbook, nomination UI, and how quickly SB Order rate changes reflect in the backend. Pick the channel you will actually fund every year before the 5th-of-month habit slips.

Practical deposit calendar (before 5th of month tip)

1. Decide annual target (₹500 to ₹1,50,000).
2. Split into monthly SIPs toward PPF if that helps discipline — but ensure each credit lands for interest by watching the 5th-day rule.
3. In March, audit whether you still have headroom under ₹1.5 lakh (including minor account deposits).
4. Avoid last-day March rush without confirming online cut-offs / holiday lists.
5. Keep nomination updated; store account number and agency details with your will / family file.

PPF is a marathon. The savers who win are boringly consistent — not the ones who dump ₹1.5 lakh once and forget the 5th-day rule for eleven months.

FAQs

1. What is the PPF deposit limit 1.5 lakh rule?

Maximum ₹1,50,000 per financial year in multiples of ₹50, including your own account plus minor account deposits you fund. Minimum is ₹500 per FY.

2. What is the PPF interest rate 7.1 figure?

For Jul–Sep 2026 it is 7.1% p.a. compounded yearly, per MoF’s 30.06.2026 small-savings OM / India Post SB Order 07/2026. Later quarters can change.

3. How does PPF interest get calculated monthly?

On the lowest balance between close of the 5th day and month-end; credited at FY end.

4. Can I open PPF and also invest in FD?

Yes — different products. FD liquidity and rate cards follow bank / RBI deposit directions (see RBI FD rules); PPF follows small-savings scheme rules.

5. Is PPF available only at Post Office?

No. Authorised banks and Post Offices both offer it under the same scheme framework.

6. What if I skip a year?

Account goes into default for missing ₹500; revive by paying dues and applicable penalty / fees per scheme rules, then continue.

7. Does how PPF works in India change every quarter?

Core scheme mechanics are stable; the interest rate is reviewed quarterly by MoF. Re-read the latest OM each quarter.

Takeaway

PPF rules in one line: deposit ₹500–₹1,50,000 per FY (₹50 multiples), watch the combined minor-account ceiling, earn the notified rate (7.1% for Jul–Sep 2026) with 5th-day lowest-balance math, stay invested for 15 financial years, and use loan / partial withdrawal only as the scheme allows. It pairs well with EPF for salaried households and remains a sober core for long-term rupee goals.

Disclaimer: Educational summary of NSI / India Post / MoF-notified PPF parameters as researched on 24 Sep 2026 IST. Not tax, investment or legal advice. Confirm live interest, forms, loan/withdrawal percentages and tax sections with your bank/Post Office and a qualified adviser before depositing or withdrawing.