1) Interest rate for PPF is now pegged against the long term ( 10 year) government securities yield. ( which is 8.8% as on 30 Mar 2014). So, going forward the yield on PPF will vary with the G-sec rate . The days of fixed returns is gone.
2) Interest on PPF is calculated based on the lowest balance in your account between 5th and last day of the month. Interest is compounded annually and is credited at the end of the year. But the interest calculation is done based on the monthly balance rule stated above.( so ensure you deposit your money before 5th of every month in your PPF).
PPF- Public Provident Fund account.