How PPF interest is calculated
PPF interest is worked out every month on the lowest balance between the 5th and the last day of the month, and added to your account once a year on 31 March. Because it's added yearly, it compounds yearly. If you deposit the same amount by 5 April every year, the result follows a simple formula.
M = P × [(1 + i)n − 1] ÷ i × (1 + i)
P is the yearly deposit, i is the rate as a decimal (0.071) and n is the number of years (15).
Depositing the full ₹1.5 lakh by 5 April for 15 years at 7.1% gives ₹40,68,209. You put in ₹22.5 lakh, so ₹18.18 lakh is interest, all tax-free. Spread over 12 monthly deposits made by the 5th, the same money grows to ₹39,44,599.
Extending after 15 years
When the account matures, you can extend it in blocks of 5 years. Extending once while still depositing ₹1.5 lakh a year takes the balance to about ₹66.58 lakh after 20 years. The longer the money stays, the more of the balance is interest.
PPF rules at a glance
- Deposit between ₹500 and ₹1.5 lakh each financial year, in one go or in instalments.
- The account runs for 15 full financial years after the year you open it.
- Interest and maturity are tax-free; deposits count for 80C in the old regime.
- Loans from year 3, partial withdrawals from year 7.
- Open it at a post office or most banks; one account per person.
Questions people ask
What is the current PPF interest rate?
7.1% a year for October to December 2026. The government reviews it every quarter, so the rate can change during your 15 years. This calculator assumes it stays the same.
When should I deposit to earn the most?
Interest for each month is paid on the lowest balance between the 5th and the end of the month. A deposit made by 5 April earns interest for the whole year, so that is the best time for a lump sum. If you deposit monthly, do it by the 5th.
Is PPF tax-free?
Yes. Interest and the maturity amount are tax-free. Deposits of up to ₹1.5 lakh a year also qualify for the 80C deduction in the old tax regime (not in the new regime).
Can I withdraw before 15 years?
Partial withdrawals are allowed from the 7th financial year, within limits. You can also take a loan against the balance in the 3rd to 6th year. Early closure is allowed only for reasons like serious illness or higher education, with a small interest cut.
What happens after 15 years?
You can take the money out, or extend the account in blocks of 5 years, with or without new deposits. The balance keeps earning interest either way.
Method and sources
Interest is calculated monthly at rate ÷ 12 on the balance after deposits made by the 5th, and credited at the end of each financial year. Yearly deposits are assumed by 5 April; monthly deposits by the 5th of each month. Rate as notified by the Ministry of Finance for October–December 2026; the rate is assumed constant. Deposits above ₹1.5 lakh a year are not allowed and are capped. How we calculate.
Last reviewed 22 Oct 2026 by the WealthFeedz team.