Interest earned on Public Provident Fund (PPF) is completely exempt from tax under Section 10(11). This exemption is available under both Old and New Regime. PPF is an EEE (Exempt-Exempt-Exempt) instrument: the investment is deductible under 80C (Old Regime only), interest is exempt, and maturity proceeds are exempt.
Tax Treatment
- Interest earned: Fully exempt under Section 10(11) — no tax regardless of amount
- Maturity proceeds (principal + interest): Fully exempt
- Current PPF interest rate: 7.1% per annum (compounded annually), set by Government of India quarterly
- Investment up to ₹1.5 lakh per year in a PPF account
New Regime Consideration
- The 80C deduction on PPF investment is NOT available in New Regime
- However, interest and maturity on existing PPF accounts remain fully exempt in New Regime
- PPF is still worth maintaining for the tax-free returns even without 80C benefit
- For new investments under New Regime, the math shifts — no upfront tax benefit, but growth and maturity are tax-free
Key Features
- Lock-in period: 15 years (extendable in 5-year blocks)
- Partial withdrawal allowed from 7th year onwards
- Loan facility available from 3rd to 6th year
- Government-backed — sovereign guarantee, no credit risk
- Maximum deposit: ₹1,50,000 per year across all PPF accounts
This guide reflects FY 2025-26 (AY 2026-27) and is for general information. Tax rules and limits change, and how they apply depends on your circumstances. It is not professional tax advice; consult a qualified Chartered Accountant before acting.
