PPF Account Interest Rules: PPF is a safe scheme for investors, with a maturity period of 15 years. The account can be extended after maturity, and interest continues to accrue even if no new deposits are made…
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PPF Account Interest Rules: The Public Provident Fund (PPF) is one of the most reliable savings schemes for investors. Its maturity period is 15 years, but everyone wonders: if investors stop making new deposits after this period, what will happen to the account, and will they receive any interest? Let’s find out.
Will interest continue to accrue for 15 years?
The unique feature of a PPF account is that even after maturity, investors have the option to close the account and withdraw the funds, or they can extend it. If an investor does not fill out the account extension form and does not make any new deposits, the account goes into passive extension mode. In this state, interest continues to accrue on the balance, even if no new deposits are made.
Is the interest earned on PPF taxable?
Investors can deposit a minimum of ₹500 and a maximum of ₹1.5 lakh annually into PPF. This investment is tax-deductible under Section 80C of the Income Tax Act. Furthermore, the interest earned is tax-free. This is why this scheme is extremely popular among long-term savers and tax planners.
After maturity, investors can extend the account for a period of 5 years. During this time, they can either make new deposits or continue to receive interest on the old balance. If investors choose the active extension option, they must deposit a minimum of ₹500 per year. However, if they choose the passive extension mode, they will continue to earn interest even without making any new deposits.
How much interest is currently being earned?
Currently, PPF offers an annual interest rate of 7.1%. This means that if an investor has a balance of ₹10 lakh in their account and doesn’t add any new funds, they will still earn approximately ₹71,000 in interest each year. This interest will continue to accrue to their account, and the balance will grow over time due to compounding.
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