PPF Account Rules 2025 – In India, when people look for a safe and tax-free investment option, the Public Provident Fund (PPF) is usually the first choice. Backed by the government, PPF offers triple tax benefits—your investment, the interest earned, and the final maturity amount are all completely tax-free. This is why salaried individuals, business owners, and people planning their retirement prefer PPF over most other schemes.

But many investors unknowingly make a critical mistake: they let their PPF account lapse, jeopardising the most significant benefit—tax-free returns.

How Much Must You Invest to Keep Your PPF Active?

To keep your PPF account active, you must deposit at least ₹500 every financial year.

Even missing this small amount for just one year can cause your account to become inactive or dormant.

Once the account becomes inactive:

  • You lose access to several benefits
  • The interest may no longer remain tax-free
  • Loan and partial withdrawal facilities stop immediately
  • This small oversight can turn into a bigger financial problem later.

When PPF Interest Loses Its Tax-Free Status?

A dormant PPF account loses the most significant advantage of the scheme—tax-free interest.

When the account becomes inactive:

  • Interest may become taxable
  • You cannot take a loan against the account
  • You lose the right to partial withdrawal
  • Even urgent financial needs become difficult to handle
  • A simple ₹500 miss can block your access to your own money.

When PPF Penalties Apply?

If your account has been inactive for several years, you must pay for each missed year to reactivate it.

To reactivate an inactive PPF account:

Deposit ₹500 for every missed year

Pay a penalty of ₹50 for each missed year

Complete the reactivation process at the bank or post office

For example, if your account was inactive for 3 years, you must pay:

₹500 × 3 = ₹1500 (missed deposits)

₹50 × 3 = ₹150 (penalty)
Total = ₹1650

Reactivation requires both time and money—another reason why keeping the account active is easier.

Your Responsibility: Keep Your PPF Active Every Year

Keeping your PPF active is your responsibility as an investor. Many people automate the process through auto-debit, ensuring the minimum deposit is credited without delay.

An active account ensures:

  • Continuous tax-free interest
  • Discipline in long-term savings
  • Full access to withdrawal and loan benefits
  • Even if it becomes inactive, you can easily revive it by paying the outstanding amount and any applicable penalty.

What Happens After 15 Years — PPF Extension Rules?

A PPF account matures 15 years after it is opened. At maturity:

  • You can withdraw the full amount
  • OR extend the account in 5-year blocks as many times as you want
  • The interest earned during the extension period is also completely tax-free
  • Many people extend their PPF until retirement and build a large, tax-free corpus.