In this article
The Public Provident Fund (PPF) is one of India’s most trusted long-term savings schemes — government-backed, tax-efficient and simple. But one small detail in how its interest is calculated can quietly cost you thousands of rupees: the date you deposit.
PPF rules and interest rates are set by the government and can change. Check the latest rules with your bank or post office.
How PPF interest is calculated
PPF interest follows three rules:
- Monthly calculation: interest is calculated for each month.
- Lowest balance: each month’s interest is based on the lowest balance between the 5th day and the last day of that month.
- Yearly credit: the interest for all 12 months is added to your account at the end of the financial year (31 March), and starts compounding from then.
The annual rate is divided by 12 for each month’s calculation:
Monthly interest = Lowest balance (5th to month-end) × Annual rate ÷ 12
The 5th of the month rule
Because the lowest balance after the 5th counts, a deposit made on or before the 5th earns interest for that month. A deposit made on the 6th or later doesn’t earn interest until the following month.
Example: your balance is ₹5,00,000. You deposit ₹1,50,000.
If you deposit on 3 April, April's lowest balance (5th–30th) is ₹6,50,000.
If you deposit on 10 April, April's lowest balance is ₹5,00,000 — the new money earns nothing for April.
At 7.1%, that's about ₹887 of interest lost in that year alone.
Why 5 April matters most
The financial year starts on 1 April. If you deposit your full yearly amount by 5 April, it earns interest for all 12 months of the year. Over a full 15-year PPF term, the difference adds up — because each year’s lost interest also loses its future compounding.
| Deposit ₹1.5 lakh each year | Maturity after 15 years (7.1%) |
|---|---|
| By 5 April every year | ₹40,68,209 |
| On 10 April every year | ₹40,45,735 |
| Difference | about ₹22,475 |
Same money, same rate — just five days’ difference in timing.
Lump sum vs monthly deposits
Many people deposit monthly from their salary. That’s perfectly fine, but it earns a little less than one deposit at the start of the year, because later instalments are invested for fewer months.
| Strategy (₹1.5 lakh a year, 7.1%, 15 years) | Maturity |
|---|---|
| ₹1.5 lakh by 5 April each year | ₹40,68,209 |
| ₹12,500 by the 5th of every month | about ₹39,44,600 |
If you deposit monthly, simply make sure each instalment goes in by the 5th.
Other PPF essentials
- Deposit limits: minimum ₹500 and maximum ₹1.5 lakh per financial year.
- Lock-in: 15 years, extendable in blocks of 5 years (with or without further deposits).
- Partial withdrawals are allowed from the 7th financial year, within limits.
- Loans against PPF are available in the early years, within limits.
- Missed the minimum? The account becomes inactive and can be revived by paying the minimum for each missed year plus a small penalty.
A simple habit
Set a reminder for 1 April every year, and make your PPF deposit in the first few days of the financial year. If you invest monthly, set an automatic transfer for the 1st–4th of each month.
Plan your PPF
Our PPF Calculator shows your maturity value, total investment and interest for 15, 20, 25 or 30 years, with a year-by-year table. It assumes deposits are made at the start of each year — exactly the timing this article recommends.
Free toolTry the PPF CalculatorSee how your Public Provident Fund account grows year by year.Frequently asked questions
What is the current PPF interest rate?
The government sets the rate every quarter. Check the latest rate on the official India Post or Ministry of Finance announcements, or at your bank.
Can I deposit in PPF monthly instead of once a year?
Yes. You can deposit in instalments, as long as the total is between ₹500 and ₹1.5 lakh in a financial year. Depositing before the 5th of each month gives the best result for monthly deposits.
Is PPF interest taxable?
PPF is in the exempt-exempt-exempt category: eligible deposits get a deduction under the old tax regime, and the interest and maturity amount are tax-free under current rules.
Written by the Toolsopedia team. Spotted an error? Tell us and we’ll fix it.