PPF in 2026: Key Rules, Interest Rates and Tax Benefits Explained

As investors plan their savings strategy for 2026, the Public Provident Fund (PPF) continues to be a reliable option for those seeking safety, tax efficiency and long-term financial security. Backed by the government, PPF remains largely unaffected by market volatility, making it suitable for conservative investors.

PPF Interest Rate in 2026

For the third quarter of the 2025–26 financial year, the PPF interest rate is 7.1% per annum. The rate is reviewed every quarter, and the interest rate for the January–March 2026 period is expected to be announced on 30 or 31 December 2025. Although the rate follows a formula linked to government bond yields, the final rate is decided by the government.

Key PPF Rules Investors Should Know

PPF is designed as a long-term savings product with a 15-year lock-in period. After maturity, investors can extend their account in blocks of five years, either with or without making fresh contributions. Interest earned in a PPF account is compounded annually and credited at the end of each financial year.

Deposits can be made either in a lump sum or in instalments during the year. However, to earn interest for a particular month, the amount must be deposited on or before the 5th of that month.

Tax Benefits of PPF

One of PPF’s biggest advantages is its EEE (Exempt-Exempt-Exempt) tax status. Annual contributions of up to ₹1.5 lakh qualify for tax deduction under Section 80C, available to investors who opt for the old tax regime. Importantly, the interest earned and the amount received at maturity are completely tax-free.

This tax efficiency makes PPF especially attractive for long-term investors looking to build wealth without worrying about tax outgo on returns.

Withdrawal and Closure Rules

Full withdrawal from a PPF account is allowed only after completing 15 years. Partial withdrawals are permitted after five years, subject to limits based on the account balance. Premature closure is allowed only in specific cases, such as serious illness or higher education needs.

How to Maximise PPF Returns

To maximise interest, investors should make lump-sum deposits before 5 April of the financial year. Monthly contributors should ensure deposits are made before the 5th of each month, as late deposits miss out on interest for that period.

Read more: SIP Calculator: How a ₹10,000 SIP Became Nearly ₹60 Lakh in 12 Years in this Fund?

Conclusion

While PPF may not deliver high returns like equity investments, it continues to be a strong pillar in a balanced portfolio. For investors who value safety, steady returns and long-term tax efficiency, PPF is likely to remain a dependable savings option in 2026 and beyond.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.