PPF Interest Rates are set by the Central government. Earlier they were fixed each year but are now set on a quarterly basis (every three months). This change happened from FY 2017-18 onwards.
The PPF rate for July – September 2019 (Q2 FY 19-20) is 7.9%.
The PPF rate for January – March 2019 (Q4 FY18-19) and April – June 2019 (Q1 FY19-20) was 8%.
Annual compounding of Public Provident Fund
Note that the PPF is compounded annually – this means that interest received in the past year, in turn earns interest in the current year. For instance if you have earned 8% (Rs 8,000) as interest on your PPF balance of Rs 1 lakh in the past year. The balance considered for the current year will be 108,000. This means that in the current year, your interest will be 8% of Rs 108,000 which is Rs 8,640.
Monthly Interest Calculation
Note that PPF interest is paid on the lowest balance in the PPF account from the 5th to the last day of each month. Hence it is important that you make your PPF contribution by the 5th of each month. For example, your account balance is zero until the 10th of April 2018. In that case you will not get any interest in April. Your interest will start running from May 2018.
Recent Changes in Interest Rates
In the table below, you can find a history of PPF interest rates since April 2008. As you will note, the PPF interest rate has fallen from a peak of 8.8% to a low of 7.6% in 2018. However, PPF interest rates for July – September 2019 quarter stands at 7.9%.
|July – September, 2019||7.9%|
|April –June, 2019||8%|
|January –March, 2019||8%|
|January–March , 2017||8.0%|
|April 2015– March 2016||8.7%|
|April 2014 – March 2015||8.7%|
|April 2013 – March 2014||8.7%|
|April 2012 – March 2013||8.8%|
|December 2011 – March 2012*||8.6%|
|April 2011 – December 2011||8.0%|
|April 2010 – March 2011||8.0%|
|April 2009 – March 2010||8.0%|
|April 2008 – March 2009||8.0%|
Data Source: National Savings Institute
PPF is a government savings scheme offered by banks and post offices. Some banks do not offer PPF accounts. You can find a list of banks which offer PPF accounts below.
A) Private Sector Banks
- Axis Bank
- ICICI Bank
- HDFC Bank
B) Public Sector Banks
- State Bank of India
- Canara Bank
- Indian Bank
- UCO Bank
- Bank of India
- Bank of Baroda
- Allahabad Bank
- Central Bank of India
- Union Bank of India
- Andhra Bank
- Corporation Bank
- Dena Bank
- Indian Overseas Bank
- Syndicate Bank
- UCO Bank
- United Bank of India
- Vijaya Bank
- IDBI Bank
Popular Banks Do Not Offer
- DBS Bank
- IDFC Bank
- Kotak Bank
- Standard Chartered
- Federal Bank
- Yes Bank
- IndusInd Bank
- Bandhan Bank
- Karur Vysya Bank
- South Indian Bank
Difference between PPF and GPF
GPF or General Provident Fund is only open to Government employees. Such employees are given the option to credit a certain portion of their salary to the GPF. PPF, on the other hand, is open to all Indians, government servants or not.
Interest after Death
On the death of the subscriber, the nominees must get the account transferred in their name. They cannot contribute any more money to the account in the name of the deceased. The account can continue to earn interest after death.
The PPF account passes to the nominees in accordance with the nomination specified in the account opening form. If nominee shares are mentioned (say 50% for each nominee), the account will be passed to them according to those shares. Nominees will hold the PPF money in trust for the legal heirs of the deceased.
PPF declaration in Income Tax Return (ITR)
The PPF interest is exempt from taxation. However, it has to be declared in the Income Tax Return. You can refer to your PPF passbook or online statement to obtain the figure for PPF interest.
PPF Interest For :
PPF accounts can be opened by parents/legal guardians on behalf of minors. However the maximum limit of Rs 1.5 lakh accounts to the combined accounts of the adult and the minor. For instance, a parent cannot deposit Rs 1.5 lakh in his own account and another 1.5 lakh in his daughter’s account.
However, he can deposit Rs 1 lakh in his account and Rs 50,000 in his daughter’s account. The rate is the same as the PPF rate for adults. Nomination cannot be made for such minors’ accounts.
NRIs cannot open PPF accounts. However, a resident Indian who has become an NRI after opening a PPF account can continue the account till maturity. Such an account will earn the same interest rate as that for resident Indians.
c) Senior citizens
Senior citizens get the same interest rate on the PPF as younger Indians. They get higher rates on senior citizen oriented products like SCSS (Senior Citizens Savings Scheme) and Pradhan Mantri Vaya Vandana Yojana (PMVVY).
Interest on Maturity
The PPF interest on maturity is the weighted average of the interest rates that have been declared in all the years in which the account was operational. For example, if the interest rate at PPF maturity is 8% but the interest rate in previous years was 7%, your final rate would be a weighted average of the two rates.
PPF vs. VPF Interest Rate
The VPF (Voluntary Provident Fund) is part of the Employee’s Provident Fund (EPF). It has the same rate as the EPF. The current EPF/VPF rate is 8.55% while the PPF rate fluctuates around 8%. They are also governed by different rules. Only employees in organised sector firms which offer EPF accounts can contribute to VPF. On the other hand all types of workers and even housewives can contribute to PPF accounts.