Public Provident Fund or PPF Interest Rates are set by the 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 – October 2018 is 7.6% (Q2, FY 2018-19). The PPF rate for October – December 2018 is 8%.
Annual compounding of PPF
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 for PPF
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.
PPF Interest Rates for the Past 10 Years
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% at present.
|July – September, 2018||7.6%|
|April – June, 2018||7.6%|
|January – March, 2018||7.6%|
|October – December, 2017||7.8%|
|July – September, 2017||7.8%|
|April – June, 2017||7.9%|
|January – March , 2017||8.0%|
|October – December, 2016||8.1%|
|July – September, 2016||8.1%|
|April – June, 2016||8.1%|
|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%|
Source: National Savings Institute
PPF Interest Rates – Eligible Banks
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 Offering PPF Accounts
- Axis Bank
- ICICI Bank
- HDFC Bank
B) Public Sector Banks Offering PPF Accounts
- 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 That Do not Offer PPF Account
- DBS Bank
- IDFC Bank
- Kotak Bank
- Standard Chartered
- Federal Bank
- Yes Bank
- IndusInd Bank
- Bandhan Bank
- Karur Vysya Bank
- South Indian Bank
When interest gets credited to your PPF Account?
PPF interest is credited to your PPF at the end of each financial year (FY). So for example, interest for April 2017 to March 2018 will be credited on 31st March 2018.
Difference between EPF 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.
Is PPF interest taxable?
No. PPF interest is completely tax free. Contributions to the PPF are also tax deductible under Section 80 C up to Rs 1.5 lakh per annum.
PPF Interest after Death
Upon 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 passed to them according to those shares. Nominees will hold the PPF money in trust for the legal heirs of the deceased.
How to claim PPF after death
The nominees can claim the PPF account using Form G. They have to attach the death certificate, succession certificate, PPF passbook, letter of indemnity and affidavit. Succession certificate is not required if the account balance is less than Rs 1 lakh. A legal heir can also claim the account without the presence of any nominee by producing all the documents mentioned above.
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 minors
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.
PPF interest for NRIs
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.
PPF interest for 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).
Reason why your PPF interest is not yet credited
There could be several reasons for this:
- The PPF interest rate is credited at the end of the financial year. You will not get PPF interest on a monthly or quarterly basis.
- You may have contributed more than the limit of Rs 1.5 lakh per annum. Such excess amounts will not earn any interest.
- You may have contributed without formally extending the account, 15 years after maturity. You have to fill up Form H to extend the account with contributions. Failure to submit this form within one year of account maturity means that the existing balance will earn interest but you cannot contribute fresh amounts. Interest on such fresh amounts will not be credited to the account.
PPF 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 an 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.
What was the maximum PPF rate offered?
The PPF interest rate was fixed at 12% from 1986 to 1999. This was the highest rate offered. However the inflation level and overall interest rates in those years were also different from the present ones.