PPF Interest Rate History/Current PPF Interest Rate Analysis:
For the last few decades, PPF investors have been enjoying the EEE status i.e. ‘Exempted’, ‘Exempted’ and ‘Exempted’. This simply means that the Contribution, Interest earnings and Accumulated Balance at maturity enjoy the EEE benefit.
EEE means– Let’s say you invest ₹1 Lakh in PPF(exempted U/S 80C), and you earn interest of ₹7,100[exempted U/S 10(11)] and at maturity, you get ₹1,07,100[exempted U/S 10(11)]. All these are fully exempt from tax.
But Budget 2021 announcements made a hue and cry amongst the investors of PPF regarding its taxability and EEE status. But this is not right at all. PPF still enjoys the same old EEE benefit that it used to enjoy before the Budget 2021 announcements.
In this article, I would help you in understanding the impact of Budget 2021 announcements on the PPF and also the PPF Interest Rate History, Current PPF Interest Rate and PPF Interest Calculator.
Budget 2021 impact on Current PPF Interest Rate
At the onset, I would like to explain that Budget 2021 announced that any interest earned from the employee’s contributions to the provident fund(PPF, VPF and EPF) over and above ₹2.5 Lakh in a year would be considered as taxable income from 1st April 2021. This made the PPF investors very perplexed.
But there is nothing to worry about as such. Since maximum investment allowed in the PPF is ₹1.5 Lakh in a year. Therefore, you need not worry at all. This announcement would definitely hit hard on the employees who make a contribution to their Employees’ Provident Funds.
Therefore, if an employee contributes to EPF ₹3 Lakh and ₹1.5 Lakhi in PPF, then the interest earned by the employee on ₹50,000 would be taxable. You should keep in mind that only the interest earned over and above ₹2.5 Lakh is taxable and also on the employee’s contribution and not the employer’s contribution.
- Interest earned from EPF/VPF over and above the contributions of ₹2.5 Lakh in a year is chargeable to tax;
- Only the interest earned is taxable and not the contribution made;
- Only employee’s contribution is to be considered and not the employer’s contribution to PF;
- This rule is effective from 1st April 2021;
- PPF interest income is not chargeable to tax and exempt U/S 10(11);
- PPF still enjoys the EEE status as usual;
- Budget 2021 announcement would impact the EPF and VPF contributors only;
PPF Interest Rate History From 2001 to 2021
PPF Interest Rate History for the last 20 years from 2001 to 2021 at a glance.
|Financial Year(F.Y)||Period||PPF Interest Rate(Per Year)|
|2020-2021||January 2021 – March 2021||7.10%|
|2020-2021||October 2020 – December 2020||7.10%|
|2020-2021||July 2020 – September 2020||7.10%|
|2020-2021||April 2020 – June 2020||7.10%|
|2019-2020||January 2020 – March 2020||7.90%|
|2019-2020||October 2019 – December 2019||7.90%|
|2019-2020||July 2019 – September 2019||7.90%|
|2019-2020||April 2019 – June 2019||8.00%|
|2018-2019||January 2019 – March 2019||8.00%|
|2018-2019||October 2018 – December 2018||8.00%|
|2018-2019||July 2018 – September 2018||8.00%|
|2018-2019||April 2018 – June 2018||7.60%|
|2017-2018||January 2018 – March 2018||7.60%|
|2017-2018||October 2017 – December 2017||7.80%|
|2017-2018||July 2017 – September 2017||7.80%|
|2017-2018||April 2017 – June 2017||7.90%|
|2015-2016||April 2015 – March 2016||8.70%|
|2014-2015||April 2014 – March 2015||8.70%|
|2013-2014||April 2013 – March 2014||8.70%|
|2012-2013||April 2012 – March 2013||8.80%|
|2011-2012||April 2011 – November 2011||8.00%|
|2011-2012||December 2011 – March 2012||8.60%|
|2010-2011||April 2010 – March 2011||8.00%|
|2009-2010||April 2009 – March 2010||8.00%|
|2008-2009||April 2008 – March 2009||8.00%|
|2007-2008||April 2007 – March 2008||8.00%|
|2006-2007||April 2006 – March 2007||8.00%|
|2005-2006||April 2005 – March 2006||8.00%|
|2004-2005||April 2004 – March 2005||8.00%|
|2003-2004||April 2003 – March 2004||8.00%|
|2002-2003||April 2002 – March 2003||9.00%|
|2001-2002||April 2001 – March 2002||9.50%|
Therefore, from the above PPF Interest Rate History table it is seen that the PPF rate of interest is going down day by day and more specifically drastically down in the last few years. Because even the small change of 1% would substantially reduce your accumulated balance at maturity.
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What is the Current PPF Interest Rate 2020-2021?
The current PPF interest rate is fixed by the Ministry of Finance every year on a quarterly basis. It is not like EPF interest rates, which is fixed annually.
Therefore the Current PPF Interest Rate for January 2021 to March 2021 quarter is fixed at 7.10%. However, it is also seen that the PPF Interest rate is the same for all the quarters of FY 2020-21 i.e. 7.10%.
How much I will get in PPF after 15 years?
A PPF account interest is credited to your account annually. The PPF interest is compounded annually so you have the opportunity to accumulate a substantial amount at maturity.
Now let’s see how much money you will get in PPF after 15 years for an investment ranging from ₹25,000 to ₹1,50,000 in a year at an interest rate of 7.10% per annum.
|Annual Contribution||Current PPF Interest Rate||Tenure(Years)||Maturity Value|
PPF Calculator Excel Download
This PPF Calculator will give you an idea regarding your PPF accumulation after 15 years. This PPF Calculator is based on Excel and it is very simple to use. Just put two details and it will automatically calculate your interest income and maturity value.
How is the PPF interest calculated?
As per the PPF rules, the PPF interest is calculated on a monthly basis on the PPF balance in the investor’s account but this interest amount is credited only at the end of the financial year on 31st March every year.
Interest for a month becomes due only if a contribution is made before the 5th day of the month. So, it is always advisable that to get maximum interest from the Public Provident Fund, one must invest either a lump sum or monthly amount before the 5th day of any particular month.
The minimum investment in PPF is allowed ₹500 in a year and the maximum limit is ₹1.50 lakh each year.
Key points on the PPF interest calculation
- Investment amount: The minimum investment in a year in PPF is ₹500 while the maximum permissible contribution ₹1,50,000 in a year;
- Interest calculation: PPF interest becomes due on monthly basis and the interest is credited to one’s PPF account at the end of the FY on 31st March every year;
- Monthly interest: To earn interest for a particular month, one must make a contribution to the PPF account before the 5th day of the month.
- Tax-free income: The interest income earned from the PPF account is fully tax-free as per Section 10(11) of the Income Tax Act.
Do we get interest on PPF after 15 years?
Yes. A PPF account is meant for 15 years block. Ideally, you are eligible to withdraw all the accumulated balance at the end of 15 years. But if you do not wish to withdraw and close the PPF account, your accumulated balance would continue to earn interest for an additional 5 more years.
Further, you do not need to make any fresh contribution to your PPF account after the maturity of 15 years. Only your accumulated balance would earn interest and that is completely tax-free as well.
In that case, you are eligible to withdraw from that extended PPF account once a year. So, it is very important to know that if you don’t ask the Bank or Post Office for the closure of the PPF account after 15 years, it will automatically be extended for the next 5 years with no additional contributions.
Even if you make fresh contributions monthly or yearly, it will not earn any interest on this additional contribution unless you ask the Bank or Post Office regarding this Extension of the PPF account with additional contributions.