The PPF interest rate is payable on PPF balance is fixed every year. It has been observed in the last decade that the interest rate has fluctuated however has chances of remaining stable and was expected to drop marginally for the 2016 Union Budget. However, the rate being at 8.7% in FY: 2015-2016 was slashed to 8.1% for FY: 2016-17. The rates of interest in the past few years have been as follows:
|Time||Interest Rate (p.a.)|
|01 Dec 2011 - 31 March 2012||8.60%|
|01 April 2012 - 31st March 2013||8.80%|
|01 April 2013 - 31st March 2014||8.70%|
|01 April 2014 - 31st March 2015||8.70%|
|01 April 2015 - 31st March 2016||8.70%|
|01 April 2016 - 31st March 2017||8.10%|
How the Interest Rate on PPF is Calculated?
The interest on PPF is computed on the minimum balance in an individual’s account between the 5th to the final day of every month. Hence, in case the individual wishes to deposit large amounts at any time of the year, he or she has to make sure that he or she invests on or prior the 5th of the particular month, allowing the individual to earn interest for the whole month.
What are the Advantages of PPF?
Here are some of the main advantages of owning a PPF account for Indian citizen:
- If an individual makes a deposits of upto Rs. 1,00,000 per annum in their PPF account. The sum of money is deductible under Section 80c, Income Tax Act. The contributions made to the PPF accounts of the individual’s spouse and/or children are also amounts that are eligible for tax deduction under the same section of the same Act.
- The exemption on tax also is extensive up to the interest earned on the PPF account which means the full balance in the individual’s PPF account is absolutely exempt from tax. This means that the returns on investment in their PPF are completely tax free.
- The balance amount in a PPF account cannot be acquainted to any claim in cases of debt or even liability. Hence this amount of money belongs to the individual for life and is available after death to the account holder’s loved ones.
How to Find out Your Current PPF Interest Rate
The current interest for a year, generally from April 1 of the year to March 31 of the next year is the same. It is available online and does not change throughout the whole year. However, the more important number which may be the current balance on the PPF account is a more important number. Here is what needs to be done to check that out:
- The individual may contact their bank or post office branch to know the current status of their PPF account.
- If the bank provides online banking, they can request them to link their PPF account to their existing online banking account. Once they are merged, the accounts, can be accessed and basic functions such as view, checking account status as well as the payment for PPF loans can be made online.
Note that EPF and PPF are two very different things as the EPF is meant for employees whereas PPF is a personal savings account which can be used by a individual who is self-employed or income is not acquainted through an organization or company. This savings investment can also be made by people who already own an EPF account.