Government Keeps PPF Interest Rate Unchanged At 7.1% For January–March Quarter

The Finance Ministry has announced interest rates for small savings schemes, including the Public Provident Fund (PPF), for the January–March quarter of FY 2025–26. The PPF interest rate remains unchanged at 7.1%, continuing the trend of stability in this long-term savings instrument.

This means investors will earn tax-free interest at 7.1% on PPF deposits during the first three months of 2026. The rate has remained steady since April 1, 2020, despite fluctuations in government security yields.

Interest Rate History and Stability

The PPF interest rate has been maintained at 7.1% for nearly six years, reflecting the government’s approach to providing stability for long-term savers. Prior to April 2020, PPF offered 7.9% interest between July 2019 and March 2020, and 8% between October 2018 and June 2019.

The decision to keep rates unchanged comes even as the formula recommended by the Shyamala Gopinath Committee suggests a lower rate based on recent government security yields. For instance, during the July–September quarter, 10-year G-Sec yields averaged between 6.32% and 6.54%, which would have implied a PPF rate of 6.57%–6.79%.

Eligibility And Account Features

A PPF account can be opened by a single adult resident Indian or by a guardian on behalf of a minor or a person of unsound mind. Each individual is allowed only one account across the country, either in a bank or a post office.

The scheme permits annual deposits of up to ₹1.5 lakh per person, which qualify for tax deduction under Section 80C of the Income Tax Act under the old tax regime. The account matures after 15 years, and both the principal and interest earned are fully tax-free under both old and new tax regimes.

Benefits And Investment Appeal

PPF remains a popular choice for risk-averse investors seeking guaranteed returns and tax benefits. Amid falling fixed deposit rates, the scheme offers a safe and tax-free long-term investment option.

The interest is compounded annually, and withdrawals are permitted after the completion of five financial years, subject to conditions. Investors can also avail loans against their PPF balance between the third and sixth financial year, adding flexibility to the scheme.

Read More: HDFC AMC and IFC Tie-Up to Expand Private Credit.

Conclusion

The decision to maintain the PPF interest rate at 7.1% for the January–March quarter of FY 2025–26 provides continuity for investors relying on this tax-free savings instrument. With unchanged rates since April 2020, PPF continues to offer a secure and predictable avenue for long-term wealth creation. The scheme’s tax benefits and guaranteed returns make it a cornerstone of conservative investment portfolios.

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