Public Provident Fund (PPF) overview: Interest Rates & History

The Public Provident Fund is India preferred way of Tax cum saving instrument. PPF was introduced by the National Savings Institute of the Ministry of Finance in 1968. The aim of the scheme is to mobilize small savings by offering an investment with reasonable returns combined with income tax benefits. The scheme have sovereign guaranteed i.e. the money is fully backed by the Govt of India. PPF money can’t be attached by court order. However, Income Tax & other Government authorities can attach the account for recovering tax dues.

The PPF is managed by Employee Provident Fund Organization (EPFO). EPFO is a statutory body of Govt of India under the ministry of labour and employment.

Resident Indians are eligible to open account of PPF. NRI through not allowed to make fresh investment in PPF, they can continue their existing investment up to the maturity period.

The characteristic of PPF which makes it most attractive mode of investment is the Tax Treatment. PPF is an “EEE” product from Tax angle. What does this means?

This is an Exempt-Exempt-Exempt (3E) product under Tax. When one subscribes to PPF i.e. makes payment towards PPF, it’s expected under Sec 80 (c). The interest earned is Tax exempted. The maturity amount is also Tax exempted. This tax treatment makes PPF an extremely compelling product. The total corpus under EPFO is more than Rs 9 Lakh Crores as on date. 

Interest Rates

PPF returns are fixed by the Central Government. Since 2016-17 they are set quarterly according to prevailing interest rates on government bonds. Before this yearly rates were set. The interest rate the interest rate for October 2018 – December 2018 is 8%. 

8% Tax Free returns sound too good to be true. Right? How about 12% returns? Yes, you read correctly. The rates were 12% for almost 14 years from 1986-2000. That was history. Today the rates have been gradually coming down in recent years from 8.1% to 7.6% in last 4-5 years. The current quarter saw uptick to 8% again but we think this may be short-lived and may be given to small and retail investors post GST/ demonetization saga and we are now officially in election season. Next 10 years, the PPF rates in our opinion will move southwards only.  

In this backdrop let’s see the history of PPF rates since 1986

v  PPF Interest Rate from 1^st April 1986 to 14th Jan-2000 – 12.0%

v  PPF Interest Rate from 15^th Jan-2000 to 28^th Feb-2001 – 11.0%

v  PPF Interest Rate from 1^st Mar-2001 to 28^th Feb-2002 – 9.5%

v  PPF Interest Rate from 1^st Mar-2002 to 28^th Feb-2003 – 9.0%

v  PPF Interest Rate from 1^st Mar-2003 to 30^th Nov-2011 – 8.0%

v  PPF Interest Rate from 1^st Dec-2011 to 31^st Mar-2012 – 8.6%

v  PPF Interest Rate for FY 2012-13 – 8.8%

v  PPF Interest Rate for FY 2013-14 &  FY 2015-16 – 8.7%

v  PPF Interest Rate from 1st April 2016 to 30th September 2016 – 8.1%

v  PPF Interest Rate from 1st October 2016 to 31st March 2017 – 8.0%

v  PPF Interest Rate from 1st April 2017 to 30th June 2017 – 7.9%

v  PPF Interest Rate from 1st July 2017 to 31st Dec 2017 – 7.8%

v  PPF Interest Rate from 1st Jan 2018 to 30th September 2018 – 7.6%

v  PPF Interest Rate 1st Oct 2018 to 31^st December 2018  – 8.0%

You can also see the interest rate history on pictorial format below :

About Us

We are a neo advisory firm that believes in Goal based investment. We offer investment services in Mutual Funds and also retirement/ Life insurance solutions. We have over a decade experience in finance sector. For any clarification / investment needs call us on 9325295502. We provide services across India. Also visit us on www.growwealthadvisors.com