Public Provident Fund (PPF): Was the Interest Rate Changed for April–June 2025 Quarter?
Public Provident Fund (PPF): Was the Interest Rate Changed for April–June 2025 Quarter?
New Delhi: The Indian government has announced that the interest rate on the Public Provident Fund (PPF) will remain unchanged at 7.1% for the April-June 2025 quarter. The rate, which is reviewed quarterly by the Ministry of Finance, continues to offer stability to long-term investors seeking tax-free and government-backed returns.
Overview of PPF Scheme
The Public Provident Fund is one of India’s most trusted small savings schemes, designed to encourage long-term savings with assured returns and comprehensive tax benefits. With a lock-in period of 15 years, the PPF falls under the Exempt-Exempt-Exempt (EEE) category, meaning the contributions, interest earned, and maturity amount are all exempt from tax.
Key Features of PPF:
- Eligibility: Any resident Indian individual can open a PPF account, limited to one account per person.
- Deposit Limits: A minimum annual deposit of ₹500 is required to keep the account active. The maximum investment allowed is ₹1.5 lakh per financial year.
- Interest Crediting: Interest is calculated monthly on the lowest balance between the 5th and the last day of each month but is credited annually at the end of the financial year.
- Account Revival: Inactive accounts can be revived with a minimum annual deposit and a penalty of ₹50 for each defaulted year.
Maximizing Returns
Financial experts recommend depositing funds before the 5th of every month or making lump sum contributions by April 5 to maximize interest. This timing ensures the entire month’s balance qualifies for interest accrual.
Extension and Withdrawal Provisions
At maturity, PPF accounts can be extended in blocks of five years, either with or without additional contributions. Investors opting to continue deposits post-maturity can earn interest on both their existing balance and new contributions.
Partial withdrawals are permitted from the seventh financial year onward. The amount allowed is the lesser of 50% of the account balance at the end of the fourth financial year or the balance of the preceding year. These withdrawals are tax-free and can be used for essential expenses such as education or medical needs.
Tax Advantages
PPF remains a highly tax-efficient investment under Section 80C of the Income Tax Act, 1961. Contributions qualify for tax deductions, while the interest earned and the maturity proceeds are entirely tax-exempt. Even partial withdrawals do not attract any tax liabilities.
With its blend of security, consistent returns, and tax savings, the PPF continues to be a preferred investment avenue for conservative investors planning for long-term goals.
