New Delhi: It has been exactly 12 years since the Public Provident Fund (PPF) investment limit was last revised. Back in 2014, the then Finance Minister Arun Jaitley raised the cap from ₹1 lakh to ₹1.5 lakh. Since then, inflation has surged and incomes have risen, but the tax-saving ceiling for India’s most popular retirement scheme has remained frozen.
Now, ahead of the Union Budget on February 1, the Institute of Chartered Accountants of India (ICAI) has formally proposed hiking the limit to ₹3 lakhs—but will the Finance Minister agree?
The ICAI Proposal: Why ₹3 Lakhs?
In its pre-budget memorandum to the Finance Ministry, the ICAI highlighted that the current limit under Section 80C (which covers PPF) is outdated.
- Inflation Impact: ₹1.5 lakh in 2014 holds significantly less purchasing power in 2026.
- Self-Employed Safety Net: Unlike salaried employees who have the EPF, self-employed professionals rely heavily on PPF for social security. A higher limit ensures a larger retirement corpus.
- The Demand: While ICAI has suggested ₹3 lakhs, market experts believe a “middle-ground” hike to ₹2 lakhs or ₹2.5 lakhs is more likely if the government decides to act.
The “New Tax Regime” Roadblock
The biggest hurdle to this demand is the government’s clear shift toward the New Tax Regime, which does not offer deductions under Section 80C.
- The Conflict: Raising the PPF limit primarily benefits the Old Tax Regime. If the government wants to phase out the Old Regime, increasing the 80C limit contradicts that goal.
- The Solution? Experts argue that PPF should be “de-linked” from Section 80C and given a standalone deduction limit, or—in a bold move—be allowed as a deduction even under the New Tax Regime to encourage long-term savings.
Impact Analysis: What if the Limit Hits ₹2 Lakhs?
If the limit is raised to ₹2 lakhs, the compounding magic of PPF becomes significantly more powerful.
| Scenario | Annual Investment | Corpus after 15 Years (@ 7.1%) | Difference |
| Current Limit | ₹1,50,000 | ₹40.68 Lakhs | – |
| Proposed Limit | ₹2,00,000 | ₹54.24 Lakhs | + ₹13.56 Lakhs |
Note: Calculations assume the interest rate remains constant at 7.1%.
Key Highlights
- Last Revision: 2014 (raised from ₹1L to ₹1.5L).
- Current Status: Limit is ₹1.5L; Interest Rate is 7.1% (Jan-Mar 2026).
- Likelihood: Moderate. Depends on whether the Govt wants to support the Old Tax Regime.
FAQ Section
A1: Technically, no. Under current banking rules and the PPF Scheme 2019, systems are designed to reject deposits exceeding ₹1.5 lakh in a financial year. If a system error allows it, the excess amount will be refunded to you without earning any interest.
A2: Not unless the Finance Minister specifically announces that PPF deductions will be allowed under the New Regime (Section 115BAC). Currently, 80C deductions are exclusive to the Old Regime.
A3: The final decision will be revealed during FM Nirmala Sitharaman’s Budget Speech on Sunday, February 1, 2026. (Note: While Parliament usually does not sit on Sundays, the Budget is expected to follow the scheduled date).
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