NEW DELHI, November 10, 2026 — The Public Provident Fund continues to offer an annual interest rate of 7.1 per cent for the October–December 2026 quarter, after the Government retained small-savings rates at their previous levels for the third quarter of the financial year. PPF is a government-backed long-term savings scheme with a 15-year maturity period, a minimum annual deposit of ₹500 and a maximum annual deposit of ₹1.5 lakh. Its appeal comes from the combination of a sovereign-backed structure, tax treatment and access to loans and partial withdrawals under defined conditions. It is not, however, a fully liquid account or a scheme with a rate fixed for the entire 15-year term.
The interest rate is reviewed by the government periodically. The 7.1 per cent rate applies to the current quarter, not automatically to every future year of an account. A saver opening a PPF account should therefore distinguish the scheme’s long-term rules from the rate notified for a particular quarter. The balance earns interest under the rate applicable from time to time, and the government can revise that rate for a future period.
Who can open a PPF account and how it works
A PPF account can be opened by an individual in their own name. A parent or guardian may open an account on behalf of a minor or a person who cannot operate an account independently. The scheme does not permit a joint account. An individual can maintain one account in their own name, and the annual deposit ceiling is shared with any account opened on behalf of a minor. A guardian should not assume that a separate minor account creates an additional ₹1.5 lakh contribution limit beyond the individual ceiling.
Accounts are available through post offices and authorised banks. Applicants generally complete the prescribed account-opening form, provide identity and address details, submit the required KYC documents and make the minimum initial deposit. The account can be funded in one lump sum or in instalments during the financial year. The scheme rules require deposits in multiples of ₹50, with a minimum of ₹500 and a maximum of ₹1.5 lakh in a year. A saver should keep the deposit receipt or online transaction reference and check that the amount appears in the account statement.
PPF is designed for long-term saving rather than day-to-day banking. The account has a defined maturity period and restrictions on early access. It may be suitable for people who want a government-backed savings component over a long horizon, but it may not suit someone who expects to need the entire contribution within a short period. Before opening an account, a saver should compare the scheme’s lock-in and withdrawal rules with emergency-fund needs, debt obligations and other financial goals.
How the interest rate is applied
The government sets the interest rate for small-savings schemes for specified quarters. For October 1 to December 31, 2026, PPF remains at 7.1 per cent per annum. The rate is not a fixed promise for the full maturity period. If the government changes the rate in a later quarter, the account will earn the rate applicable under the scheme from that point. This means a projection that assumes 7.1 per cent for every year until maturity is only an illustration, not a guaranteed final balance.
The PPF scheme rules specify that interest is calculated on the lowest balance in the account between the close of the fifth day of a month and the end of that month. Interest is credited at the end of the financial year. This timing makes the date of a deposit relevant. A contribution made early in a month may qualify for that month’s interest calculation, while a deposit made after the fifth day may not affect the eligible balance for that month. Savers who intend to make their annual contribution in one instalment should check the timing rather than wait until the final days of the financial year.
Interest compounds through the account’s annual crediting process. The balance shown after interest is credited becomes part of the account for later calculations. The actual return over a long period will depend on the rates notified in each quarter, the timing and size of deposits, and whether the account is extended after maturity. Online calculators can illustrate different contribution patterns, but they should not be treated as a promise of a particular maturity amount.
Deposits, inactive accounts and the annual limit
The minimum deposit is ₹500 in a financial year. If the account holder fails to make the required minimum deposit after the initial year, the account can be treated as discontinued under the scheme. A discontinued account may be revived during its maturity period by paying the minimum deposit arrears and the prescribed fee for each year of default. The rules also restrict loans and partial withdrawals from a discontinued account until it is regularised. A saver who misses a year should check the account’s status before assuming that the usual withdrawal facilities remain available.
The annual ceiling of ₹1.5 lakh includes deposits made into the individual’s own account and an account opened on behalf of a minor. Deposits can be made in a lump sum or in instalments, but the total should remain within the yearly limit. Contributions above the permitted ceiling are not entitled to the scheme’s normal interest treatment. People who use PPF for tax planning should reconcile deposits across all accounts linked to the same individual before the financial year closes.
Loan facility and partial withdrawals
PPF provides a loan facility during the earlier years of the account. In broad terms, a loan can be sought after one year has passed from the end of the financial year in which the initial subscription was made and before five years have expired from the end of that year. This is commonly described as a facility available from the third through the sixth financial year, subject to the scheme’s calculation of the eligible balance. The maximum loan is linked to the amount that stood to the account’s credit at the end of the second year immediately preceding the year in which the loan is requested.
The account holder may obtain only one loan in a year and cannot take a fresh loan while an earlier loan and its interest remain unpaid. The principal must generally be repaid within 36 months. The scheme provides a lower interest charge where the principal is repaid within that period; if repayment is delayed, the rate applied to the outstanding amount is higher. A PPF loan can be less disruptive than closing a long-term account, but it still creates a repayment obligation and reduces the account holder’s flexibility until it is cleared.
Partial withdrawals become available later. Under the scheme, a withdrawal can be made after five years have expired from the end of the financial year in which the account was opened. This is why the facility is commonly described as beginning in the seventh financial year. The permitted amount is capped at 50 per cent of the lower of the balance at the end of the fourth year immediately preceding the withdrawal year or the balance at the end of the preceding year. A withdrawal can be made only once in a year, and any outstanding loan and interest must be cleared first.
For example, a person who opens an account during the 2026–27 financial year does not become eligible to withdraw simply five calendar years after the opening date. The scheme counts from the end of the financial year in which the account was opened. The account holder should use the official scheme calculation and the balance shown in the account statement before submitting a request. A bank or post office can explain the applicable form and the balance used to determine the permitted amount.
Maturity, extension and premature closure
The account can be closed after 15 years have expired from the end of the financial year in which it was opened. This is not always the same as 15 years from the exact date of the first deposit. At maturity, the account holder may withdraw the balance with due interest or continue the account without making further deposits. An account continued without deposits can keep earning the applicable interest, and the holder may make one withdrawal in each year within the available balance.
A saver who wants to continue contributing after maturity can apply for an extension in blocks of five years. The option to extend with deposits must be exercised within the prescribed period, generally before one year has passed after maturity. If the account is continued without deposits for more than a year, the scheme does not allow the holder to switch back to an extension with deposits. The rules also limit withdrawals during an extended block period. It is therefore important to decide before maturity whether the account will be closed, retained without new deposits or extended with fresh contributions.
Premature closure is permitted only after the minimum period specified in the scheme and on limited grounds. These include treatment of a life-threatening disease affecting the account holder or specified family members, higher education of the account holder or dependent children, and a change in the account holder’s residency status, subject to documentary evidence. On premature closure, the interest allowed is reduced by one percentage point from the rates credited since the account was opened or extended. This penalty is one reason PPF should not be treated as an emergency savings account.
Tax treatment and what savers should consider
PPF is commonly described as an exempt-style long-term savings product because contributions, interest and maturity proceeds have historically received favourable tax treatment under the applicable provisions. However, the deduction available for a contribution can depend on the tax regime and the law in force for the relevant financial year. A saver should not assume that every contribution automatically reduces taxable income under every regime. The current Income Tax Department guidance and the individual’s tax circumstances should be checked before a contribution is made solely for tax reasons.
PPF should also be assessed against inflation and the saver’s time horizon. The rate is government-notified and can change; the account is not exposed to daily market-price movements like an equity fund, but its return is not guaranteed at the same rate for 15 years. A long lock-in can help maintain discipline, yet it can be inconvenient if the saver needs cash for an emergency, a home purchase or a major medical expense. Maintaining a separate liquid emergency reserve can reduce the temptation to close a PPF account early.
For a person considering the scheme, the key questions are practical: Can the annual contribution be maintained? Is the 15-year period compatible with the goal? Is there enough money outside PPF for short-term needs? Does the tax regime make the contribution deduction useful? A government-backed savings product can form one part of a diversified plan, but it should not be treated as the only place to keep savings or as a substitute for insurance and emergency funds.
The current rate of 7.1 per cent applies through December 31, 2026 unless the government announces a change for the next quarter. The deposit limit, loan rules, partial-withdrawal formula and maturity provisions come from the PPF Scheme, 2019 and its amendments. Savers should use the official account statement and current government notification when calculating interest or planning a withdrawal.
Frequently asked questions
What is the PPF interest rate for October–December 2026?
The notified rate is 7.1 per cent per annum for the October 1 to December 31, 2026 quarter.
What is the minimum and maximum annual PPF deposit?
The minimum annual deposit is ₹500 and the maximum is ₹1.5 lakh, including deposits into the individual’s own account and an account opened for a minor.
When can a PPF account holder make a partial withdrawal?
Partial withdrawals become available after five years have expired from the end of the financial year in which the account was opened, subject to the scheme’s balance formula and other conditions.
Is the PPF rate fixed for all 15 years?
No. The government reviews small-savings rates periodically. The rate applicable to a future quarter may differ from the current 7.1 per cent.
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