Frequently Asked Questions
What is the current PPF interest rate in 2024?
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The current PPF interest rate for Q3 FY 2024-25 (October-December 2024) is 7.1% per annum, compounded annually. This rate has remained stable at 7.1% since Q2 FY 2020-21. PPF interest rates are reviewed and announced quarterly by the Government of India (typically in the last week of March, June, September, and December). The interest is calculated on the lowest balance between the 5th and last day of each month and credited to the account on March 31st annually. This makes PPF one of the most attractive government-backed, risk-free investment options with complete tax exemption.
How much will I get after 15 years in PPF?
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For maximum annual investment of ₹1,50,000 for 15 years at the current interest rate of 7.1%, the maturity amount will be approximately ₹40,68,209. This includes your total contribution of ₹22,50,000 (₹1.5L × 15 years) and interest earned of ₹18,18,209. The exact amount depends on: (1) When you make deposits each year - depositing before 5th of the month earns full month's interest, (2) If interest rates change during the tenure, (3) Whether you invest lump sum annually or in installments. For ₹50,000 annual investment, maturity is approximately ₹13,56,069. Use our calculator above to get precise figures for your investment amount.
Is PPF completely tax free?
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Yes, PPF offers complete tax exemption under EEE (Exempt-Exempt-Exempt) status, making it one of the best tax-saving investments: (1) Investment Exempt: You get deduction under Section 80C for up to ₹1.5 lakh invested annually, saving ₹46,800 tax at 30% bracket, (2) Interest Exempt: All interest earned (approximately ₹18 lakhs over 15 years for max investment) is completely tax-free, (3) Maturity Exempt: The entire maturity amount is 100% tax-free. Unlike FD where interest is taxable or NPS where 60% is taxable, PPF offers triple tax benefit. This makes post-tax returns from PPF significantly better than taxable investments like FDs or bonds.
Can I withdraw PPF before 15 years?
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Partial withdrawal is allowed but with restrictions: After 7th year: You can withdraw up to 50% of the balance at the end of 4th preceding year or end of preceding year, whichever is lower. One withdrawal allowed per year. Premature closure (after 5 years): Allowed only for specific purposes - (1) Higher education of self/children/dependent, (2) Medical treatment of self/family, (3) Change in residency status. Interest rate reduced by 1% for premature closure. Cannot withdraw: Before completing 5 years under any circumstances except death. Best practice: Avoid premature withdrawal as you lose compounding benefit. Use loan facility (available from 3rd to 6th year) for emergency needs instead.
What is the minimum and maximum amount for PPF?
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Minimum investment: ₹500 per financial year. If you don't invest minimum ₹500 in a year, account becomes discontinued (can be revived with penalty). Maximum investment: ₹1,50,000 per financial year. Excess deposits don't earn interest and are returned. Deposit frequency: Minimum 1, Maximum 12 deposits per year in any amount totaling within limits. Important: Both husband and wife can have separate PPF accounts with individual ₹1.5L limits (total ₹3L per family). Minor children can also have PPF accounts with separate ₹1.5L limit. Penalty: ₹50 per year for accounts with less than ₹500 deposit plus ₹50 revival fee. Best strategy: Invest maximum ₹1.5L in lump sum before 5th April to earn maximum interest for the year.
How is PPF interest calculated?
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PPF interest is calculated on the lowest balance between 5th and end of month. Formula: Interest = (Lowest balance × Interest rate) / 100. Annual interest is compounded and credited on March 31st. Example: If you deposit ₹1,50,000 on April 1st, you earn full year's interest on entire amount (₹1,50,000 × 7.1% = ₹10,650 in Year 1). If you deposit ₹1,50,000 on April 6th, April's interest is calculated on ₹0 (since deposit after 5th), losing ₹887 in first year alone! Strategy to maximize interest: (1) Make deposits before 5th of the month, (2) Deposit in April to June for maximum compounding benefit, (3) Avoid deposits after 5th of any month, (4) Don't make multiple small deposits - one lump sum is better. Over 15 years, timing of deposits can make a difference of ₹50,000-₹1,00,000 in maturity amount!
Can I extend PPF after 15 years?
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Yes, PPF can be extended in blocks of 5 years indefinitely after maturity. Two extension options: Option 1 - With contributions: Continue investing up to ₹1.5L/year, earn interest, and claim 80C benefits for 5 more years. Maturity after 20 years: approximately ₹68 lakhs (if you invested max from start). Option 2 - Without contributions: Keep existing corpus and earn interest without new deposits. Existing amount keeps growing at PPF rate. After first 15 years with ₹40.68L corpus, without new deposits it grows to ₹57.5L in 20 years, ₹81.3L in 25 years! Withdrawal during extension: One withdrawal per year allowed. Application: Submit Form H before maturity date (within 1 year of maturity). Best for: Retirees wanting passive, tax-free income. No need to close and lose benefits!
Can I have multiple PPF accounts?
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No, an individual can have only ONE PPF account in their name. If you open multiple accounts, all except the first will be closed and contributions returned without interest. However: Exceptions allowed: (1) Husband and wife can have separate accounts (total ₹3L investment), (2) Parents can open PPF for minor children (guardian status), (3) Joint Hindu Undivided Family (HUF) account - separate from individual. After minor turns major: Minor PPF account converted to individual account, both can continue. If you have 2 accounts by mistake: Second account will be closed, money returned, 80C benefit reversed for second account, may face penalty. Account transfer: You can transfer PPF account across post offices/banks anywhere in India without charges. Post marriage: Women retain their PPF account after marriage; not merged with husband's.
Is PPF better than FD for tax saving?
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Yes, PPF is significantly better than Tax Saver FD for multiple reasons: Returns comparison: PPF: 7.1% tax-free (effective 10.14% at 30% bracket). Tax Saver FD: 6.5-7% but interest fully taxable (effective 4.55-4.9% post-tax at 30%). Lock-in period: Both have lock-in but PPF offers loan and partial withdrawal after 3rd and 7th year respectively. Tax Saver FD has strict 5-year lock-in. Tax benefits: PPF: EEE - Investment, interest, and maturity all tax-free. FD: Only investment exempt (80C), interest taxable, maturity taxable. Long-term wealth: PPF: ₹1.5L/year for 15 years = ₹40.68L tax-free. FD: Same investment = ₹35.8L, minus ₹4.8L tax on interest = ₹31L net. Verdict: PPF beats FD by ₹9.68 lakhs over 15 years! Only choose FD if you need guaranteed returns for less than 15 years.
What happens to PPF after account holder's death?
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PPF account is closed and amount paid to nominee/legal heir with following process: If nominee exists: (1) Nominee submits death certificate, claim form, ID proof, (2) Entire balance paid to nominee within 15-30 days, (3) Amount is tax-free for nominee, (4) Interest paid till date of closure. If no nominee: Legal heirs must provide succession certificate/probate of will along with death certificate. Process takes 2-3 months. Minor account: If minor dies, amount paid to guardian who opened account. Important: Always add nomination to PPF account (Form E). Nomination can be changed anytime (Form E1). Multiple nominees allowed with percentage share specified. Tax implications: PPF maturity amount (including interest) is tax-free for nominee under Section 10(11). Not considered income for nominee. Tip: Review and update nomination after major life events (marriage, birth of children).
Should I invest in PPF or NPS for retirement?
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Both have different purposes; ideally invest in both: PPF Advantages: (1) Guaranteed 7.1% returns, zero risk, (2) 100% tax-free maturity, (3) Can withdraw entire corpus, (4) 15-year minimum tenure. NPS Advantages: (1) Higher potential returns (10-12% historical), (2) Extra ₹50K deduction (80CCD1B), (3) Better for long-term wealth creation, (4) Till age 60. Disadvantages: PPF - Lower returns, 15-year lock-in. NPS - Market risk, 40% annuity mandatory, 60% taxable. Ideal strategy: Age 25-40: 70% NPS (equity), 30% PPF (debt). Age 40-50: 50-50 split. Age 50-60: 30% NPS, 70% PPF. For risk-averse: 100% PPF safe but may not beat inflation. For aggressive: Mix equity MF + NPS + PPF. Retirement corpus example (₹1.5L/year for 30 years): PPF only: ₹1.5 Cr. NPS only: ₹2.5-3 Cr but 40% locked. Mixed approach: ₹2 Cr with flexibility.
Can NRIs invest in PPF?
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No, NRIs (Non-Resident Indians) cannot open new PPF accounts. However, existing accounts can be continued: Rules for existing PPF: If you opened PPF as resident and later became NRI: (1) Account continues till maturity (15 years), (2) Can make deposits up to ₹1.5L/year, (3) Interest and tax benefits continue, (4) Cannot extend account after 15 years. After maturity: Must close account and withdraw amount. Cannot repatriate funds abroad (kept in NRO account). Exception: If NRI returns to India before maturity, account remains valid and can be extended. Alternative for NRIs: (1) Open in minor child's name (if residing in India with guardian), (2) NRE/NRO fixed deposits, (3) Mutual funds through NRE account, (4) International retirement accounts (401k, IRA). Important: If you become NRI, inform bank/post office to avoid complications. Don't try to hide NRI status as it may lead to account closure and penalties.
