Public Provident Fund (PPF) interest rate left unchanged at 7.1%. How to get max return?

Public Provident Fund (PPF) interest rate: The Government of India (GoI) has announced small savings interest rates for Q1FY24 for various small saving schemes. While declaring small savings interest rates from April 2023, central government announced 10 bps to 70 bps interest rate hike for various small saving schemes, which include Senior Citizen Savings scheme, Sukanya Samriddhi Account scheme, Monthly Income Savings scheme, National Savings Certificate, Kisan Vikas Patra, and all post office time deposits. However, the GoI decided to left Public Provident Fund (PPF) interest rate unchanged at 7.10 per cent. But, after ushering in new financial year, one will have an option to get maximum return on one's money if they adhere to a trick while investing under Public Provident Fund scheme.

According to tax and investment experts, Public Provident Fund scheme allows an investor to deposit in PPF account via one time upfront deposits as well as deposits in instalments. However, maximum instalments allowed under Public Provident Fund Scheme is 12 only. So, one can either invest in one's PPF account in monthly SIP mode or just go for one full upfront payment and keep on earning PPF interest for the whole financial year that has started today. But, tax and investment advisors suggested PPF accountholders to invest in between first to fourth date of the month as it would allow them to get interest of that month as well.

PPF interest rate calculation

Explaining PPF interest rate calculation, SEBI registered tax and investment expert Jitendra Solanki said, "PPF interest is calculated on the basis of minimum balance from 5th to last date of the month. So, if a PPF account holder deposits on or before 4th date of the month, then in that case the PPF account holder will be able to earn PPF interest of that month as well."

This means, if an investor invests by 4th of April in one's PPF account, then the PPF account holder will get interest on one's deposit in the month of April as well as PPF interest will be calculated on minimum PPF balance from 5th April to 30th April 2023.

On how to maximise one's earnings via PPF interest rate, Pankaj Mathpal, MD & CEO at Optima Money Managers said, "An earning individual looking for income tax saving investment option, may opt to invest in one's PPF account in upfront one deposit. for such investors, investing on or before 4th April is advisable as it would enable them to get PPF interest rate for entire FY24. However, for those who want to invest in instalments, my suggestion for them is to deposit their instalments in between 1st to 4th date of the month. This will help them get PPF interest of that month as well."

Public Provident Fund scheme

PPF accounts can be opened in any PSU or private bank. It has a maturity period of 15 years and PPF account can be opened with minimum ₹100 deposit. However, one needs to deposit a minimum of ₹500 in one financial year to keep one's PPF account in active mode. Under Section 80C of the income tax act, an earning individual can claim income tax rebate on up to ₹1.50 lakh investment in one's PPF account in single financial year.