PPF interest isn't calculated on your final year-end balance — it's calculated monthly, based on the lowest balance in your account between the 5th and the last day of each month, then credited to your account once a year at the end of the financial year.
This monthly-lowest-balance rule is exactly why financial advisors consistently recommend depositing into your PPF account before the 5th of the month rather than later — a deposit made on the 6th misses that month's interest calculation entirely, even though the money sits in the account for the rest of the month. Over many years, consistently depositing after the 5th instead of before it can add up to a meaningful amount of lost interest.
For lump-sum annual depositors, this means depositing the full year's contribution as close to April 1st (the start of the financial year) as possible maximises the number of months that contribution earns interest — depositing in April versus depositing in March of the following year, right before the deadline, makes a real compounding difference over a 15-year lock-in.
If you contribute via monthly instalments rather than a lump sum, simply making sure each month's deposit lands before the 5th is enough to capture the full interest benefit for that contribution — a small habit that compounds meaningfully over the scheme's long lock-in period.
Frequently asked questions
What is the Public Provident Fund (PPF)?
PPF is a long-term government savings scheme offering a fixed, government-declared interest rate, full tax exemption on contributions, interest, and maturity proceeds, and a mandatory 15-year lock-in, making it one of India's most trusted retirement and long-term savings instruments.
Who can open a PPF account?
Any resident Indian individual can open a PPF account, including on behalf of a minor child; NRIs cannot open new PPF accounts, though existing accounts opened while they were residents can be continued until maturity without further contributions in some cases.
What is the minimum and maximum PPF contribution?
You must deposit at least ₹500 in a financial year to keep the account active, and can contribute up to a maximum of ₹1.5 lakh per financial year, in up to 12 instalments across the year.