Public Provident Fund Interest

Retirement

Quick Definition

Public Provident Fund (PPF) Interest is the rate of return earned on investments made in the PPF scheme, which is a government-backed long-term savings plan in India.

Detailed Explanation

The Public Provident Fund (PPF) is a popular small savings scheme operated by India Post and banks, backed by the Government of India.

  • Interest rates are declared quarterly by the Government of India
  • Interest is compounded annually
  • It offers tax-free returns (EEE status)

Current Interest Rate (Indicative)

  • Around 7%–8% per annum (varies quarterly)

How PPF Interest is Calculated

  • Calculated on the lowest balance between 5th and last day of the month
  • Credited at the end of the financial year
  • Compounded yearly

Why PPF Interest Matters

  • Safe, risk-free returns
  • Tax-free earnings
  • Ideal for long-term wealth creation

Key Features of PPF

  • Lock-in period: 15 years
  • Minimum investment: ₹500/year
  • Maximum investment: ₹1.5 lakh/year
  • Eligible for tax deduction under Section 80C

Example

"If you invest ₹1 lakh annually in PPF at 7.1%, it grows significantly over 15 years due to compounding."

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