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Post Office - Public Provident Fund Account (PPF)

Scheme NamePost Office - Public Provident Fund Account (PPF)

Total Tenure

15 years

Minimum Deposit Amount

Rs. 500 per annum

Maximum Deposit Amount

Rs. 1.5 lakhs per annum

Interest Rate

From 01.04.2020, the interest rate is at

7.1% per annum (compounded every year)

Premature Closure

Available after 5 years from the end of the year in which the account was opened subject to certain conditions

Introduction to Post Office PPF

The Indian Postal System is the heart of the country's mail and parcel delivery systems. A few decades back, it was one of the most commonly used public service systems. Using this mechanism, the government established a number of savings programmes to help the rural and economically disadvantaged members of society save regularly.

Post Office Savings Back Account, Post Office Term Deposits, Public Provident Fund Account (PPF), Post Office Recurring Deposits, National Savings Certificate (NSC), Kisan Vikas Patra (KVP), and the latest Sukanya Samriddhi Yojana (SSY), are some of the popular savings schemes offered through India Post Offices.

The Post Office Public Provident Fund is a common investment scheme among investors because of its many investor-friendly features and associated benefits. It's a long-term investing scheme that appeals to those who want to build a considerable corpus while maintaining a steady income. Individuals who open a PPF account are mostly low risk takers and are primarily concerned with the safety of their principal.

Since it is a scheme supported by the Government of India, the interest rate on PPF accounts is fixed uniformly for all post offices and banks that provide the service. The current post office PPF interest rate is 7.1% (Q1 FY 2021-22).

This scheme is perfect for anyone with a lower risk tolerance. Since the government mandated this scheme, it is backed up by assured returns to meet the financial needs of the Indian people. Furthermore, the assets deposited in the PPF portfolio are not market-linked.

Investors may also invest in the public provident fund system in order to diversify their investment - related portfolio. PPF accounts will help you preserve your investments through any kind of recession in the economy.

Benefits Of Opening A Post Office Public Provident Fund

The Post Office PPF account comes with various monetary and tax savings benefits to the investor. Here are a few of them:

  • It gives one of the highest interest rate across all savings schemes in the country. The current interest is at 7.1% and it was 7.5% for the previous quarter of Q3 2020-21.
  • Offers assured returns since it is backed by the government.
  • Very low investment amount allows people of all income group to invest in this plan.
  • Investors get EEE benefits, ie. The investment amount, the interest earned and the final maturity amount, all 3 are exempted from tax.
  • It is a long term investment plan. The maturity period is 15 years, allowing for the accumulation of a considerable amount of corpus. Serves as a good retirement planning scheme for many employees.
  • Premature withdrawals are permitted, but only after a 5-year period of continuous investment.
  • From the third year onwards, investors will take out loans.
  • In certain conditions, it is possible to close a PPF account prematurely.

Who is eligible to open a post office public provident fund account?

This scheme is open to all Indian citizens who fulfil the following conditions:

  • An individual who is a resident Indian, as a single account
  • A guardian on behalf of minor/ person of unsound mind

How much money can I deposit in my post office public provident fund account?

  • This account can be opened by depositing cash or cheque.
  • Only one account can be opened in an individual’s name, across all post offices in the country
  • The minimum deposit is Rs.500 in a financial year and the maximum is Rs.1.5 lakhs
  • Deposits can be made in any number of instalments, in multiples of Rs.50
  • The deposits made into this account are exempted from tax under section 80C of the IT Act.

How much interest does my post office public provident fund account earn?

Post Office Public Provident Fund Account is known to earn one of the highest interest rates across all savings schemes. This scheme is backed by the government and hence comes with a fixed interest rate across all post offices in the country. Also, this interest rate is reviewed and updated periodically to give the best returns to the investors.

  • The current interest rate stands at 7.1%.
  • Interest rates will be determined by the Ministry of Finance on a quarterly basis.
  • The interest is based on the lowest balance in the account between the close of the fifth day and the end of the month for the calendar month.
  • At the end of each financial year, interest will be added to the account.
  • Interest will be added to the account at the end of each fiscal year, regardless of where the account stands at the end of the fiscal year.
  • Interest paid is tax-free under the Income Tax Act (i.e. when an account is transferred from a bank to a PO or vice versa).

What happens once my post office public provident fund account matures?

This account matures after 15 years. Upon maturity, the investor has the following options:

  • Account closure form and passbook must be sent to the concerned Post Office in order to receive maturity payment.
  • Can keep the maturity value of his/her account without making a deposit; the PPF interest rate will apply, and payment can be made at any time or once every fiscal year.
  • By sending a specified extension form to the concerned Post Office, he or she may extend his or her account for another block of 5 years and so on (within one year of maturity).

Are partial withdrawals allowed from my post office public provident fund account?

Since you're putting a lot of money into this account, it should be easy to get to when you need it. To facilitate this, one partial withdrawal from the account is permitted every five years, excluding the year in which the account was opened. The amount of withdrawal is limited to 50% of the credit balance at the end of the fourth preceding year or the end of the preceding year, whichever is lower.

What are the options for premature withdrawal from my post office public provident fund account?

Upon completing 5 years from the end of the year in which the account was opened, the account can be prematurely closed under the following circumstances.

  • In the event that the account holder, family, or minor children are diagnosed with a life-threatening illness.
  • In the case of the account holder's or dependent children's higher education.
  • In the event that the account holder's residency status changes (i.e. they become an NRI).
  • When an account is prematurely closed, 1% interest is deducted from the date of account opening/extension, as applicable.
  • The account can be closed by sending the specified form along with the passbook to the concerned Post Office.

What happens when the account holder dies before the maturity date?

In case of premature death of the account holder,

  • The account will be closed, and the applicant or legitimate heir(s) will not be permitted to continue making deposits in the account.
  • PPF interest will be charged at the end of the corresponding month in which the account is closed if it is closed due to death.

How to open a post office PPF account?

The PPF Account can be opened at any of your nearest post office.

  • You need to submit the duly filled application form along with relevant KYC Documents.
  • You will be required to submit one passport size photograph for the passbook.
  • The acceptable KYC Documents are:
    • Id proof like Aadhaar, Voter ID, Driver’s License, etc.,
    • PAN card
    • Residential address proof
    • Form for nominee declaration
    • Passport-sized photograph


1. Is there an option to open Post Office PPF Account online?

Currently, there is no option to open a PPF Account online at your post office. But online PPF Accounts are available through your bank’s website.

2. What is the penalty for premature closure of Post Office PPF Account?

In the event of an early closing, 1% interest will be deducted from the date of account opening/extension, as applicable.

3. Will I get assured returns from my Post Office PPF Account?

There is no guaranteed maturity amount in this scheme. However, the scheme is backed by the government and assures the safety of your principal amount. It also gives one of the highest interest rates in the market.

4. Can I take the Post Office PPF account for a tenure lesser than 15 years?

No, the scheme comes with a fixed term of 15 years. You can go for a partial withdrawal once in a financial year to meet any emergency needs.

5. Can I transfer my post office PPF account from one post office to another?

Yes, you can transfer your PPF account across any post office in India.

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