Is PPF Taxable? (2026 Rules)
Short answer: no. PPF is one of the very few instruments in India that is exempt at every stage — deposits qualify for the Section 80C deduction (old regime), the interest is tax-free, and the full maturity amount is tax-free[Sec 10(11)]. Here is exactly what that EEE status covers, and the edge cases (new regime, NRIs, withdrawals) people actually get wrong.
PPF tax treatment at a glance
| Stage | Tax treatment | Legal basis |
|---|---|---|
| Deposit (up to ₹1.5 lakh/year) | 80C deduction (old regime only) | Section 80C |
| Annual interest credited | Fully exempt | Section 10(11) |
| Partial withdrawal (from year 7) | Fully exempt | Section 10(11); PPF Scheme, 2019 |
| Maturity after 15 years | Fully exempt | Section 10(11) |
| Balance during 5-year extensions | Interest stays exempt | Section 10(11) |
The one thing the new tax regime changes
The EEE label has three legs. The new regime (Section 115BAC) cuts only the first one: fresh PPF deposits get no 80C deduction because the new regime disallows most Chapter VI-A deductions. The other two legs — tax-free interest and tax-free maturity under Section 10(11) — are untouched in both regimes.
Practical consequence: under the new regime PPF competes on its post-tax merits alone — a sovereign-guaranteed, entirely tax-free compounding rate — rather than on the upfront deduction. Compare regimes with our Old vs New Tax Regime tool.
What 'tax-free' is worth in rupees
Because interest and maturity are exempt under Section 10(11), PPF's published rate is effectively a post-tax rate. To compare against an FD, gross up: at a 30% slab, 7.1% tax-free ≈ 10.1% pre-tax on a fixed deposit. Model your own balance with the PPF Calculator.
Worked example
₹1,50,000 deposited every year for 15 years at 7.1% grows to roughly ₹40.7 lakh, of which about ₹18.2 lakh is interest.
In a taxable deposit at the same rate, a 30%-slab investor would lose roughly ₹5.5 lakh of that interest to tax over the period. In PPF, the entire ₹40.7 lakh arrives tax-free, and nothing is added to taxable income at maturity.
Frequently Asked Questions
Is PPF interest taxable?
No. Interest credited to a PPF account is fully exempt from income tax under Section 10(11) of the Income Tax Act, with no upper limit on the exempt amount. This holds under both the old and new tax regimes.
Is the PPF maturity amount taxable?
No. The entire maturity proceeds — your deposits plus all accumulated interest — are tax-free under Section 10(11). Nothing is added to your income in the year of maturity.
Is PPF tax-free in the new tax regime?
The exemption on PPF interest and maturity under Section 10(11) applies in both regimes. What you lose in the new regime is the Section 80C deduction on fresh deposits — the money you put in gets no deduction, but everything it earns and pays out stays tax-free.
Is a partial withdrawal from PPF taxable?
No. Partial withdrawals, allowed from the 7th financial year onwards under the PPF Scheme rules, are tax-free — as are loans taken against the account balance and withdrawals during the extended (post-15-year) period.
Do I need to report PPF interest in my ITR?
Yes, report it under Schedule EI (Exempt Income). It does not increase your tax, but reporting keeps your ITR consistent with the interest your bank or post office reports, and avoids mismatch queries.
Is PPF taxable for NRIs?
An account opened while you were resident can be continued (without extension) until its 15-year maturity, and the Indian tax exemption under Section 10(11) still applies. However, your country of residence may tax the interest under its own law — the EEE status is an Indian tax concept only.
Does the ₹2.5 lakh EPF interest tax rule apply to PPF?
No. The Finance Act 2021 provisos taxing interest on employee provident fund contributions above ₹2.5 lakh a year apply to EPF/GPF-type funds under Sections 10(11)/10(12) first proviso conditions. PPF deposits are capped at ₹1.5 lakh a year by the scheme itself, so PPF interest remains fully exempt in practice.
Related tools & guides
Sources & References
Legal basis: Section 10(11) and Section 80C, Income Tax Act, 1961; Public Provident Fund Scheme, 2019 (Ministry of Finance).
Official sources
- Income Tax Department — Acts, Rules & Notifications
- National Savings Institute, Ministry of Finance (PPF rules)
Last verified against official sources: July 2026. Figures are researched from the government sources above and checked before publishing. See our Editorial & Verification Policy.
This page is for informational and educational purposes only and reflects the law as verified on the date shown above. Consult a qualified tax professional for advice on your specific situation. This is not financial or tax advice.