PPF Interest Rate — Historical Trend & Calculation Logic

Since 2016, small-savings rates including PPF are reset on the first day of every quarter by the Department of Economic Affairs. The Shyamala Gopinath Committee formula links each scheme's rate to a benchmark Government security plus a spread. For PPF the benchmark is the 10-year G-Sec, currently with a notional spread of around 25 basis points. In practice, governments often hold the rate steady — small savings is politically sensitive, so quarterly resets are rarer than the formula suggests.

Interest is calculated on the lowest balance between the 5th and the last day of every month. To maximise interest, deposit before the 5th of each month rather than at month-end. Though computed monthly, interest is credited to the PPF account only at the end of the financial year on 31 March.

PPF debuted in 1968 at 4.8% p.a. It rose to a peak of 12% in the 1990s, hovered around 8% through the 2010s and has settled near 7.1% since April 2020. Even at 7.1%, the EEE tax treatment makes the post-tax equivalent superior to most bank FDs for a 30% bracket investor.