From PPF interest rates to rules: 7 things Public Provident Fund investors should know going into 2026

As investors look ahead to 2026, the Public Provident Fund (PPF) continues to stand out as a dependable, risk-free savings instrument for those seeking stability, tax efficiency and long-term financial security.

At a time when market-linked investments remain volatile, PPF retains its appeal as a low-risk, government-backed option.

Here are key things that PPF investors should know going into 2026.

1. For the 2025–26 financial year third quarter, the PPF interest rate stands at 7.1% per annum. The rate is reviewed every quarter, with the January–March 2026 rate expected to be announced on 30 or 31 December 2025.

2. Another major draw is PPF’s EEE (Exempt-Exempt-Exempt) tax status. Contributions of up to ₹1.5 lakh per year qualify for tax deduction under Section 80C, available to investors opting for the old tax regime. Importantly, both the interest earned and the maturity proceeds are fully tax-free, making PPF extremely attractive.

3. PPF is designed as a long-term commitment, with a 15-year lock-in period. Investors can extend their accounts in blocks of five years after maturity, with or without fresh contributions.

4. Interest earned on a PPF account is compounded once a year, with the accrued interest added to the balance at the close of each financial year.

5. PPF interest rates are set based on the framework suggested by the Shyamala Gopinath Committee. The calculation considers the average yield of 10-year government securities in the secondary market from the preceding quarter, along with an additional 25 basis points. That said, the government may choose not to implement these recommendations exactly.

6. PPF withdrawals

7. PPF investors should deposit funds on or before the 5th of each month to earn interest for that month. Although interest is credited annually on March 31, it is calculated monthly, so late deposits miss out on interest.

For instance, for FY 25-26, investing ₹1.5 lakh before April 5, 2025, at a 7.1% rate earns interest for the full year (₹10,650), while investing after April 5 earns interest for only 11 months (₹9,762.50). A March 2026 deposit earns just one month’s interest.

To maximise returns, lump-sum investments should be made before April 5, and monthly contributions before the 5th of each month.