PPF And SSY: Why Depositing Before 5 April Could Earn You Significantly More Tax-Free Interest

With the new financial year under way, investors in the Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) have a narrow window to maximise their tax-free returns, and the deadline is 5 April.

The critical April 5 rule

PPF interest is calculated on the lowest balance held between the 5th and the end of every month. If you deposit by 5 April, your full amount begins earning interest from April itself. Miss this date by even one day, however, and your money only starts earning from the following month, meaning you lose a full month of interest every year.

To illustrate the difference: if you deposit Rs 1.5 lakh into your PPF account before 5 April, the entire sum is taken into account for that month's interest calculation. At the current rate of 7.1 per cent, you would earn Rs 10,650 in interest over the year. Deposit after 5 April, and interest accrues for only 11 months, bringing your annual return down to Rs 9,762.50.That is a difference of nearly Rs 888 in a single year, purely down to timing.

Over a 15-year investment horizon, depositing a lump sum between 1 and 5 April of each financial year could earn you an additional Rs 1,23,610 in interest at maturity, all of it completely tax-free.

PPF interest rate held steady

The government has left interest rates unchanged for small savings schemes, including PPF, for the eighth consecutive quarter beginning 1 April 2026, retaining the PPF rate at 7.1 per cent per annum. 

What about the new tax regime?

Many investors who have opted for the new tax regime wonder whether continuing to invest in PPF still makes sense, since the Section 80C deduction of up to Rs 1.5 lakh is not available under the new regime. However, even under the new tax regime, the interest earned and the maturity amount from PPF remain fully tax-free, making it attractive regardless of which tax regime you choose.

PPF carries EEE (Exempt-Exempt-Exempt) status, meaning contributions under the old regime, interest earned, and maturity proceeds are all exempt from tax.

Monthly investors must also act early

For those who prefer to invest in monthly instalments rather than a lump sum, the same rule applies: deposits must be made before the 5th of each month to earn interest for that month. Late deposits miss out on interest for that period.

Sukanya Samriddhi Yojana: same logic, higher rate

The government has also kept the SSY interest rate unchanged at 8.2 per cent for the April to June 2026 quarter. Like PPF, SSY contributions qualify for Section 80C deductions of up to Rs 1.5 lakh, and both the interest and maturity proceeds are fully tax-free. 

The SSY account can be opened at any India Post office or branch of an authorised commercial bank, and is available for girl children up to the age of 10.The scheme matures after 21 years, though contributions need only be made for 15 years. With 5 April falling this Sunday, investors have today as their last practical opportunity to make timely deposits and ensure their money works for the full financial year.