PPF was initially introduced in 1968 with the motive to mobilize small time savings into an investment with a reasonable return along with benefits to save tax.
It helps in building a retirement corpus for an individual. With the PPF interest rate, it is secured risk management with compounded returns.
|
The current PPF interest rate is 7.1% and is compounded annually. |
PPF is backed by the Government of India, and it offers a guaranteed risk-free return. Additionally, it falls under EEE status, which means the amount invested, the interest earned, and the maturity amount received are tax-free.
PPF also has a minimum tenure of 15 years and can be extended in blocks of five indefinitely. Moreover, the minimum investment of a PPF account is ₹500 and a maximum of ₹1,50,000. It can also be made in a lump sum or in a maximum of 12 instalments. The deposit of a PPF account needs to be made a minimum of once a year.
Here is how the PPF account interest rates have changed in the previous years to the latest PPF interest rate.
|
Financial Year |
PPF Interest Rate History (in % p.a) |
|
1 January 2024 – 30 March 2024 |
7.10% |
|
1 October 2023 – 31 December 2023 |
7.10% |
|
1 July 2023 – 30 September 2023 |
7.10% |
|
1 April 2023 – 30 June 2023 |
7.10% |
|
1 January 2023 – 30 March 2023 |
7.10% |
|
1 October 2022 – 31 December 2022 |
7.10% |
|
1 July 2022 – 30 September 2022 |
7.10% |
|
1 April 2022 – 30 June 2022 |
7.10% |
|
1 January 2022 – 31 March 2022 |
7.10% |
|
1 October 2021 – 31 December 2021 |
7.10% |
|
1 July 2021- 30 September 2021 |
7.10% |
|
1 April 2021 - July 2021 |
7.10% |
|
1 January 2021 - 31 March 2021 |
7.10% |
|
1 October 2020 – 31 December 2020 |
7.10% |
|
1 July 2020 - 30 September 2020 |
7.10% |
|
1 April 2020 - 30 June 2020 |
7.10% |
|
1 January 2020 - 31 March 2020 |
7.90% |
|
1 October 2019 - 31 December 2019 |
7.90% |
|
1 July 2019 - 30 September 2019 |
7.90% |
|
1 April 2019 - 30 June 2019 |
8.00% |
|
1 January 2019 - 31 March 2019 |
8.00% |
|
1 October 2018 - 31 December 2018 |
8.00% |
|
1 July 2018 - 30 September 2018 |
7.60% |
|
1 April 2018 - 30 June 2018 |
7.60% |
|
1 January 2018 - 31 March 2018 |
7.60% |
|
1 October 2017 - 26 December 2017 |
7.80% |
|
1 July 2017 - 30 September 2017 |
7.80% |
|
1 April 2017 - 30 June 2017 |
7.90% |
|
1 January 2017 - 31 March 2017 |
8.00% |
|
1 October 2016 - 31 December 2016 |
8.00% |
|
1 July 2016 - 30 September 2016 |
8.10% |
|
1 April 2016 - 30 June 2016 |
8.10% |
Interest in PPF is compounded every year. The formula to this is, F=P[({(1+i)^n}-1)/i]
The explanation of the formula:
F = Maturity Proceeds of the PPF
P = Annual Installments
n = Number of Years
i = Rate of Interest/100
PPF is one of the most popular government-backed saving schemes in the country. It was launched by the government to benefit small savers, PPF offers returns, in addition to tax benefits, as it falls under the Exempt-Exempt category.
If you invest in PPF, you would like to know how the money would grow during the investment tenure. Utilizing the PPF calculator, you could easily calculate the year-wise PPF returns you could earn by contributing to your PPF account on a pre-determined period and with a particular frequency. The interest rate, maturity, taxation, and withdrawal criteria are set by the government.
| Interest Rates | The interest rates on PPF are higher than those offered on account balance and are slightly higher than fixed deposits. |
| Tax Benefits | Section 80C allows a deduction for the principal sum expended up to Rs. 1.5 lakh. The interest gained, as well as the maturity value, is also tax-free for principal, interest, and maturity amounts, which makes the whole fund exempt-exempt-exempt. |
| Government Management | PPF investments are guaranteed and regulated by the Indian government, making them safer than other investment alternatives such as savings accounts, FDs, and ELSS. |
| Fund Benefits |
From the third to the sixth year after the account is opened, an investor will take a loan against the PPF account. A creditor may also withdraw a portion of the money starting in the seventh financial year after the account is opened. |
| Nomination | A guardian of a juvenile or mentally ill child may open a PPF account on their behalf. For them, this is a viable choice for securing their future. |
| Future Security | In the case of insolvency, the balance of a PPF account cannot be added to an investor’s liabilities. As a result, this fund should be used as a last resort to guarantee future stability for the lender. |
The Provident Fund scheme is a long-term saving along with a tax instrument that has been introduced by the National Savings Institute of the Finance Ministry. It aims at mobilizing small-term savings under investors.
As it is under the EEE tax category, it falls under Income Tax. It is a fund that is compounded annually, with interest calculated on a monthly basis which is credited at the end of the year.
The Interest rates are fixed quarterly by the Ministry of Finance, the Government of India. Banks offer a PPF account at the interest rate fixed by the Government of India. The interest on a PPF account is estimated and charged on the balance in the account of the lender.
The interest rate on the PPF system is set by the government of India, and the return has been declining in recent years.