What is PPF Interest Rate in 2024? All You Need to Know About PPF Interest

1. Flexible Investments

The minimum annual investment needed to maintain an active PPF account is Rs. 500 but you can invest up to Rs. 1.5 lakh in a financial year and grow your investments at the applicable PPF interest rate. This level of flexibility in terms of investment amount makes PPF a suitable investment option for individuals from various walks of life. What’s more, you are also free to make monthly, quarterly, semi-annual or annual investments into the account this ensures that you can make investments without overstressing your finances.     

2. Helps you Meet Long-Term Financial Goals

Do you wish to buy a house? Or want to give your children the best education? Whatever your long-term financial goals are, Public Provident Fund can help you meet your financial goals by growing your savings at the applicable PPF interest rate. The 15-year maturity period of PPF also ensures that you stay invested for the long-term so that the power of compounding working in your favour.  

3. Secure Investment With Assured Returns 

Everybody wishes to get high returns on their investment. But not everybody wishes to take high risks to get such returns. For some investors, investment security can make or break the deal. This is to say, they might settle for moderate returns but might not compromise on investment security.

Public Provident Fund is one such scheme, that offers investment security to investors. This is in part because it is a government-backed saving scheme introduced by the government that is unaffected by market risks. Additionally, a PPF account offers investors assured returns at a pre-determined interest rate that is reviewed quarterly by the Ministry of Finance. 

How is Interest on PPF Calculated?

PPF interest rate is one of the key features of PPF investment as it helps individuals get fixed returns on their investment. PPF interest rate is reviewed by the Ministry of Finance quarterly and once fixed all PPF accounts earn interest at the same rate. So, while PPF interest rates may increase or decrease periodically, return on the investment is always guaranteed.

PPF interest is calculated every calendar month based on the lowest balance in the PPF account between the 5^th and last day of the month using the applicable PPF interest rate. However, the interest earned is credited to the PPF account only after the end of the financial year.  

Current and Historical PPF Interest Rates in India

As mentioned earlier, PPF interest rates are subject to periodic change and are reviewed quarterly by the Ministry of Finance, Government of India. As of the current quarter ending March 2024, the Public Provident interest rate is 7.1%. However, historically PPF interest rates have been as high as 12% p.a. and as low as 4.8% p.a. The below table illustrates how PPF Interest Rates have changed over the years: 

Advantages of Having a PPF Account

Setting up a PPF account is of utmost importance, primarily because of the assured returns based on the applicable Public Provident Fund interest rate. However, there are a few additional benefits of a PPF account. Here are some of them:

1. Tax Benefits

One of the key benefits of PPF is the tax saving benefit on investments offered under Section 80C of the Income Tax Act. So, an individual can claim tax deduction of up to Rs. 1.5 lakh in a financial year on PPF investments. But that’s not all, PPF is an Exempt-Exempt-Exempt (EEE) investment so PPF interest is not taxable and similarly maturity amount is also tax-free irrespective of how high or low the PPF interest rate is.

2. Loan facility

PPF investment allows loan facility against the PPF account balance. This feature is available to the account holders from the 3rd financial year to the 6th financial year. While this loan is available for a short tenure of up to 36 months, the PPF loan interest rate can be as low as 1% p.a. + applicable PPF interest rate at the time of loan application.

3. Partial Withdrawals

PPF has a tenure of 15 years. Withdrawals are usually restricted within this duration. However, partial withdrawals are allowed in case of specified emergencies. Partial PPF account withdrawals are allowed from the 7th year onwards.

How to Open a PPF Account?

A PPF account can be now be opened either online and offline. But irrespective of how the account is opened or whether it is opened with a bank or a post office, the same PPF interest rate is applicable to all subscribers.   

Step 4: Fill out the application with the relevant information. Have a look again to check if the information has been entered correctly.

Step 5: You will be asked to enter the deposit amount. This will be the amount you would regularly invest in your PPF account.

Final Step: Submit the application. Authorise the set-up by entering the OTP sent to your registered mobile number. Your account is then created. 

How to Open a PPF Account Offline

Step 1: To open a PPF account offline, you would need to visit the bank branch or the India Post Office in person.

Step 2: You can get a physical copy of the PPF application form from a representative.

Step 3: Fill it out and submit all the relevant documents, photographs and the minimum amount of Rs. 100 for PPF investment.

Step 4: If all documents are in order your PPF account will be opened and you will receive a PPF account passbook with all relevant details including account balance.