Ramesh, a 34-year-old teacher in Nagpur, wants one savings habit he never has to think about again: a fixed sum every April, a government guarantee and no tax on what it earns. For millions of Indian families that habit is a PPF account. The Public Provident Fund is a 15-year savings scheme run by the Government of India through post offices and authorised banks, and its rules are set by the Public Provident Fund Scheme, 2019.
This guide explains who can open a PPF account, how much you can put in, how interest is worked out, how the tenure and extensions work, when you can borrow or withdraw, how tax applies and when you can close it early. Every rule below comes from the scheme notification and India Post’s own pages. Rates change every quarter, so treat any rate here as the one that applies today, not a promise.
Who can open a PPF account
Any resident Indian adult can open one account in his or her own name. A parent or guardian can also open one account on behalf of each minor child, or a person of unsound mind, in their care. Only one guardian can open an account for a given minor.
Three rules catch people out:
- One account per person, across the country. You cannot hold one PPF at a post office and another at a bank. The opening form asks you to declare that you have no other account.
- No joint accounts. The scheme does not allow them. You can, however, name nominees.
- Residents only. The form includes a declaration that the holder is a resident citizen and will report any change in residency. An NRI cannot open a new account.
You need the account opening form, KYC documents (Aadhaar and PAN) and a photograph. If you pay by cheque, the date the cheque is realised in the government account is treated as the date of opening or deposit.
Where you open it makes little difference to the rules. The scheme, the rate and the limits are the same at a post office and at an authorised bank. Choose the place you can reach easily, or the one that lets you deposit online, because you will be adding money every year for at least 15 years. An existing account can also be transferred between post offices and banks; the year’s interest is still credited at the end of the financial year.
Deposit limits and how often you can pay
The minimum is ₹500 in a financial year and the maximum is ₹1.5 lakh. Deposits must be in multiples of ₹50, and you can pay in one lump sum or in any number of instalments during the year.
The ₹1.5 lakh ceiling is per person, not per account. If you deposit in your own PPF and in your child’s PPF, both together cannot cross ₹1.5 lakh in a year. Anything above the ceiling is treated as a deposit in breach of the scheme and does not earn interest.
What happens if you miss a year
If you skip the ₹500 minimum in any year, the account becomes discontinued. It still earns interest, but you lose the loan and withdrawal facilities, and a discontinued account cannot be extended after maturity. You can revive it before maturity by paying ₹500 plus a ₹50 fee for every year missed. The arrears count towards that year’s ₹1.5 lakh limit; the fee does not.
| Rule | What the scheme says |
|---|---|
| Minimum deposit | ₹500 in a financial year |
| Maximum deposit | ₹1.5 lakh in a financial year, including deposits in a minor’s account you operate |
| Deposit size | Multiples of ₹50, any number of times a year |
| Interest credit | Once a year, at the end of the financial year |
| Maturity | 15 full financial years after the year of opening |
| Extension | Blocks of 5 years, with or without fresh deposits |
| Loan | From the 3rd to the 6th financial year, up to 25% of an earlier balance |
| Partial withdrawal | Once a year after 5 full financial years |
How the PPF interest rate is set and calculated
The government does not fix the PPF rate for 15 years. The Ministry of Finance notifies rates for all small savings schemes every quarter, and the new rate applies to the whole balance, old and new money alike. For October to December 2026, a Ministry of Finance office memorandum dated 30 September 2026 kept every small savings rate unchanged from the previous quarter. India Post lists the PPF rate as 7.1% a year, compounded yearly.
How you time deposits matters. Interest for each month is worked out on the lowest balance in the account between the close of the 5th day and the end of the month. Money that arrives on the 6th earns nothing for that month. Interest is added to the account once, at the end of the financial year.
That is why many savers pay their full ₹1.5 lakh on or before 5 April. As an illustration, if you deposit ₹1.5 lakh at the start of every year for 15 years and the rate stayed at 7.1% throughout (it may not), you would put in ₹22.5 lakh and end up with about ₹40.7 lakh. Try your own numbers on the PPF calculator.
Tenure: 15 years, then extensions in blocks of five
A PPF matures after 15 years counted from the end of the financial year in which you opened it. Open one in, say, October 2026 (financial year 2026-27) and it matures on 1 April 2042. At maturity you have three choices.
- Close it. Apply with the closure form and passbook and take the full balance with interest up to the end of the previous month.
- Keep it without deposits. The balance keeps earning the PPF rate for as long as you like, and you can make one withdrawal of any amount each year.
- Extend it with deposits for 5 more years. You must submit the extension form within one year of maturity. During each 5-year block your total withdrawals cannot exceed 60% of the balance at the start of that block, taken in one go or yearly.
Two points to remember. If you let the first year after maturity pass without filing the extension form, any later deposit is treated as irregular and refunded without interest. And once you choose to extend with deposits, you cannot withdraw that request later. You can repeat the extension at the end of every block.
Loans against your PPF account
A loan is available from the third financial year to the sixth. In the scheme’s words, you can apply any time after one year from the end of the year of opening, but before five years from the end of that year. For an account opened in 2026-27, that means loans from 2028-29 to 2031-32.
The loan can be up to 25% of the balance at the end of the second year before the year you apply. Apply in 2028-29 and the cap is 25% of the balance on 31 March 2027. Only one loan is allowed in a year, and a second loan is not given until the first is fully repaid.
The principal must be repaid within 36 months, in one go or in instalments. The scheme sets the loan interest at 1% a year, paid after the principal is cleared. If the principal is not repaid within 36 months, interest is charged at 6% a year from the start of the loan. A discontinued account gets no loan at all.
Partial withdrawals after five years
Withdrawals start once five years have passed from the end of the year of opening, which in practice means from the seventh financial year. One withdrawal is allowed each year.
The amount is capped at 50% of the lower of two figures: the balance at the end of the fourth year before the year of withdrawal, or the balance at the end of the previous year. Any outstanding loan and its interest must be repaid first. Withdrawals are not allowed from a discontinued account.
As an illustration, say you withdraw in 2032-33. If your balance was ₹6 lakh on 31 March 2029 and ₹11 lakh on 31 March 2032, the cap is 50% of ₹6 lakh, so ₹3 lakh.
Closing early, and what happens on death
A PPF cannot be closed in the first five years. After that, premature closure is allowed only on three grounds, each with documents:
- treatment of a life-threatening disease of the holder, spouse, dependent children or parents, backed by medical reports;
- higher education of the holder or dependent children in India or abroad, backed by admission papers and fee bills;
- a change in the holder’s residency status, backed by passport and visa or income tax return.
On early closure, interest is recalculated at 1% below the rates credited from time to time. Since a 2023 amendment, the cut applies from the date of opening or from the start of the current five-year block, whichever applies.
If the holder dies, the account is closed and the nominee or legal heir cannot continue it. The balance earns interest until the end of the month before payment. One more protection: the balance in a PPF cannot be attached by any court order or decree for a debt of the holder.
Tax treatment of a PPF account
PPF is popular partly because of tax. India Post’s scheme page states that deposits qualify for the ₹1.5 lakh savings deduction long known as section 80C, and that the interest is tax free. The maturity amount is also received tax free.
From 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act, and section numbers changed. The ₹1.5 lakh deduction for specified savings continues under the new Act. The new tax regime is the default, though, and it does not allow this deduction. So the deposit saves tax only if you choose the old regime. The tax-free interest applies either way. Compare both regimes on the income tax calculator before you decide how much to put in for the tax break alone.
Key takeaways
- One PPF account per person, residents only, no joint accounts.
- Deposit between ₹500 and ₹1.5 lakh a year; pay by 5 April for a full year’s interest.
- The rate is reset every quarter; check India Post’s rate list before you rely on a number.
- Maturity comes after 15 full financial years; extend within one year if you want to keep depositing.
- Loans run from year 3 to year 6; withdrawals start in year 7.
- Early closure is possible only after 5 years and only for illness, education or a move abroad.
- Interest is tax free; the deposit deduction works only under the old regime.
This guide is general information, not personal advice. Rules can change by notification, so confirm the details at your post office or bank before you act.
