PPF Interest Rate has been the subject of discussion after the Central Government announced cut in interests for small savings schemes including Public Provident Fund only to be withdrawn on April 1 morning. While there was disappointment on Mach 31 evening, Thursday morning brought cheers even though it was not a April Fool’s Joke. However, many people are curious about what has happened with PPF Interest rate.

PPF Interest Rate – So what has actually happened?

  • Union Finance Minister Nirmala Sitharaman-led Government of India, Ministry of Finance issued an Office Memorandum dated March 31. The memorandum disclosed the revision of Interest Rates for small savings schemes. These schemes included PPF, Savings Deposit, 1-year Time Deposit, 2-year Time Deposit, 3-year Time deposit, 5-year Time deposit, 5-year recurring deposit, senior citizen savings scheme, monthly income account, national savings certificate, kisan vikas patra, and sukanya samriddhi account scheme.
  • Rates of interest for all these schemes were revised with an effect from April 1, 2021 to June 30, 2021. Public Provident Fund or PPF saw a steep cut of 0.7 per cent. PPF interest rate was 7.1 per cent between January 1, 2021 and March 31, 2021, as per the Finance Ministry Memorandum dated March 31.
  • However, on April 1 morning, FM Sitharaman tweeted announcing the withdrawal of the Finance Ministry’s March 31 order.”Interest rates of small savings schemes of GoI shall continue to be at the rates which existed in the last quarter of 2020-2021, ie, rates that prevailed as of March 2021. Orders issued by oversight shall be withdrawn,” FM Sitharaman’s tweet reads.
  • This means that the interest rate accrued on your PPF account remains at 7.1 per cent.
  • The PPF interest is calculated based on the minimum balance between the close of fifth day and last day of every month.
  • Your PPF account has a minimum tenure of 15 years.
  • You can make a minimum investment of Rs 500 and a maximum of Rs 1.5 lakh per annum.
  • You can open a PPF account at Post Office, State Bank of India, Punjab National Bank and other government banks.
  • Private banks like HDFC Bank, ICICI Bank allow you open a PPF account.
  • A PPF account can be opened with Rs 100.
  • You can avail tax benefits on your PPF account under Section 80C of Income Tax Act. However, any investment of over Rs 1.5 lakh per annum won’t fetch you income tax benefits.