Investing in Public Provident Fund (PPF)? You can slightly boost long-term returns by timing contributions wisely. Try depositing your money before the 5th of each month to ensure it earns interest for the full month. This simple hack helps maximize compounding benefits over the years. Here's how.
What is Public Provident Fund (PPF)?
The PPF is a government-supported savings scheme known for its safety, steady returns and tax advantages. The account has a 15-year tenure, which you can extend further in blocks of five years.
How is PPF interest calculated?
PPF accounts currently offer an interest rate of 7.1%, set by the government and revised annually. Although interest is credited on 31 March each year, it is calculated on a monthly basis, making the timing of deposits important for overall returns.
If you invest in your PPF account before the 5th of each month, your deposit will be included in the interest calculation of that month. However, if you miss the deadline, you will miss out on the interest for that month. In simple words, if you deposit your money between 1 and 5 June, your money starts accruing interest from June itself. However, contributions made after the 5th will start the entire interest calculation from July.
Therefore, investing in a PPF account before the 5th of every month helps you maximize your returns.
Here's how the math goes
Let's say you invest ₹1.5 lakh in a PPF. Now, if you have missed the 5 April deadline, you will only pay interest for 11 months.
- So, if you deposit after 5 April, you will earn an interest of ₹9,762.50 for FY2026-27 at 7.1% interest rate.
- But if the investment was made before the deadline, you will earn ₹10,650 in interest.
So if you are making monthly instalments, money must be deposited before the 5th of every month.
PPF interest rate
The government has recently announced the latest interest rates on various small savings schemes, including PPF, for the April to June quarter of FY27.
“The rates of interest on various Small Savings Schemes for the first quarter of FY 2026-27, starting from April 1, 2026, and ending on June 30, 2026, shall remain unchanged from those notified for the fourth quarter (January 1, 2026, to March 31, 2026) of FY 2025-26,” the finance ministry said in a notification.
This revision means the PPF interest rates now stand at 7.1%. Notably, the government had last changed the interest rate on some small schemes, mainly operated by post offices and banks, in the fourth quarter of 2023-24 (i.e., January to March 2024).