Public Savings Fund Account: Introduced in 1968 under the National Savings Institute of the Ministry of Finance, the Public Savings Fund (PPF) scheme was introduced to encourage long-term savings and investment for retirement planning. Regarded as a prudent financial instrument for individuals averse to high-risk investments, the PPF scheme offers a combination of safety, reasonable returns and tax benefits, making it an attractive option for those looking for a reliable avenue to accumulate retirement savings.
Since the plan is mandated by the government, it is backed with guaranteed returns to safeguard the financial needs of ordinary investors. Moreover, funds invested in a PPF account are not linked to the market. Investors can also utilise the PPF scheme to diversify their financial and investment portfolio. During downturns in the economic cycle, a PPF account can provide a steady return on investment every year.
The current Public Provident Fund interest rate (PPF) is 7.1% compounded annually for the quarter ending April-June 2024. The PPF interest rate has remained at 7.1% since April 2020.
However, it is noteworthy that there was a time when the scheme offered a fairly high interest rate of 12%.During this period, the deposit limit was set at Rs 40,000 for a period of two years and Rs 60,000 for a period of around 12 years.
interest rate
When the scheme was launched in 1968, the PPF interest rate was just 4.8% and the maximum investment limit was just Rs 15,000.Historical data on Public Savings Fund (PPF) interest rates shows that from April 1, 1986 to March 31, 1988 and from April 1, 1988 to January 14, 2000, the interest rate was 12%. Thereafter, from January 15, 2000 to February 28, 2001, the interest rate came down to 11%.
Over the past decade, PPF interest rates have fluctuated between 7.1% and 8.8%, notably peaking at 8.80% from April 1, 2012 to March 31, 2013.
Thereafter, the interest rate remained at 8.7% from April 1, 2013 to March 31, 2016. However, between April 1, 2013 and March 31, 2014, the PPF deposit limit was capped at Rs 10 lakh, which was subsequently increased to Rs 15 lakh from April 1, 2014.
The interest rate was kept unchanged at 7.1% for Q2 FY25. The tenor of the investment vehicle is 15 years.
Interest rates since the 2000s
Annual interest rate Maximum
From April 1, 1999 to January 14, 2000 12 60000
From January 15, 2000 to February 28, 2001 11 60000
From March 1, 2001 to February 28, 2002 9.50 60000
From March 1, 2002 to March 31, 2002 9.00 60000
From April 1, 2002 to February 28, 2003 9 70000
From March 1, 2003 to March 31, 2011 8 70000
From April 1, 2011 to November 30, 2011 8 100000
From December 1, 2011 to March 31, 2012 8.60 100000
From April 1, 2012 to March 31, 2013 8.80 100000
From April 1, 2013 to March 31, 2014 8.70 100000
From April 1, 2014 to March 31, 2016 8.70 150000
From April 1, 2016 to September 30, 2016 8.10 150000
From October 1, 2016 to March 31, 2017 8 150000
From April 1, 2017 to June 30, 2017 7.90 150000
From July 1, 2017 to September 30, 2017 7.80 150000
From January 1, 2018 to September 30, 2018 7.60 150000
From October 1, 2018 to June 30, 2019 8.00 150000
From July 1, 2019 to March 31, 2020 7.90 150000
From April 1, 2020 to September 30, 2020 7.10 150000
From October 1, 2022 to December 31, 2022 7.10 150000
From January 1, 2023 to March 31, 2023 7.10 150000
From April 1, 2024 to June 30, 2024 7.10 150000
From July 1, 2024 to September 30, 2024 7.10 150000
Taxability of PPF
Public Provident Fund (PPF) is a highly effective tax-saving investment product that falls under the triple tax-free category, popularly known as Tax-Free-Exempt (EEE), which means you get tax benefits at three key stages – investment, accumulation and withdrawal.
One of the major benefits of PPF is that it qualifies for deduction under Section 80C of the Income Tax Act, 1961. Investors can claim deduction on investments up to Rs 1.5 lakh per financial year. Moreover, interest earned in a PPF account is tax-free.
Moreover, upon maturity, the savings in a PPF account can be withdrawn tax-free, thus offering extensive tax benefits. This exemption applies to both the principal and interest invested. These significant tax benefits make PPF the preferred investment vehicle for individuals looking to ensure financial security while maximising tax savings.
Investment amount
A minimum of Rs 500 and a maximum of Rs 1.5 lakh can be invested annually in the provident fund scheme. This investment can be made in a lump sum or in instalments. However, an individual can make payments into his/her Public Provident Fund (PPF) account only in 12 instalments per year.
How to Open a PPF Account
Investors can open an account both offline and online. To activate PPF online, visit the portal of your chosen bank or post office.
The following documents are required for Public Provident Fund Account:
> KYC Documents: Aadhaar, Voter ID, Driving License
> PAN Card
> Address proof
> Candidate Declaration
> Passport size photo