PPF interest rate 2022: Know tax benefit, withdrawal rules, how to calculate interest, and more

Public Provident Fund (PPF) is a long-term investment option backed by the government that enables an investor to accumulate a retirement corpus while saving on annual income taxes. With an interest rate higher than Fixed Deposits (FD), the PPF has a number of benefits for the common man.

Currently, PPF interest rate is at 7.1 per cent and it is calculated on a monthly-basis but compounded annually. Here are the other advantages, tax benefits and more on PPF that investors should be aware of:

How is PPF interest given?

PPF interest is given on the minimum PPF account balance available between 5th to last date of the month. So, if a PPF account holder deposits from 1st to 4th date of a month, then the investor is eligible for PPF interest of that month as well. So, for monthly PPF investor it is advisable to invest from 1st to 4th of the month whereas for lump sum annual depositors, they should deposit from 1st to 4th April and get PPF interest for the entire financial year on their deposit.

What is the minimum amount for PPF deposit?

A PPF account can be opened with a minimum amount of Rs 500. The account holder should deposit at least ₹500 in one financial year to keep its account active.

Moreover, in one financial year, an account holder can deposit a maximum of Rs 1.5 lakh.

It should be noted that one person can have only one PPF account and joint account opening is not allowed.

What are PPF withdrawal rules?

A PPF account holder can fully withdraw the PPF account balance only upon maturity i.e. after the completion of 15 years. However, in case of financial emergency, the scheme permits partial PPF withdrawal from 7th year of account opening. Premature withdrawal is allowed after completion of 4 years of PPF account opening.

How to get PPF tax benefit?

As per Section 80C of the Income Tax Act, a PPF deposit up to ₹1.50 lakh in one financial year can be claimed for income tax benefit. This tax benefit under Section 80C has to be claimed while filing income tax return (ITR).