Calculators

PPF Calculator

Calculate returns on your Public Provident Fund and plan your tax-saving investments

What is Public Provident Fund (PPF)?

The Public Provident Fund (PPF) is a long-term savings scheme backed by the Government of India, designed to help individuals build a retirement corpus while saving taxes. It offers attractive interest rates, complete tax exemption on returns, and sovereign guarantee, making it one of the most popular investment options in India.

Key Features of PPF

  • Government Backed: Sovereign guarantee ensures complete safety of your investment
  • Tax Benefits: Tax deduction under Section 80C, tax-free interest, and tax-free maturity
  • Competitive Interest: Currently offering 7.1% interest rate (compounded annually)
  • Long-term Investment: 15-year mandatory lock-in period with extension option
  • Flexible Contributions: Invest minimum ₹500 to maximum ₹1,50,000 per year
  • Loan Facility: Avail loans against PPF balance from 3rd to 6th year

How Does PPF Work?

When you open a PPF account, you can invest any amount between ₹500 to ₹1,50,000 per year. The government sets the interest rate annually, which is compounded yearly. Your money grows tax-free for 15 years. After maturity, you can withdraw the entire amount or extend the account in blocks of 5 years with or without further contributions.

PPF Interest Calculation

PPF interest is calculated on the minimum balance in your account between the 5th and last day of each month. Interest is compounded annually and credited at the end of the financial year. The formula used is:

Maturity Amount = P × [(1 + r)^n - 1] / r × (1 + r)

  • P = Annual investment amount
  • r = Annual interest rate
  • n = Number of years

Tax Benefits of PPF

  • Section 80C: Deduction up to ₹1,50,000 on investments
  • Section 10: Interest earned is completely tax-free
  • EEE Benefits: Exempt-Exempt-Exempt (investment, interest, and maturity all tax-free)
  • No TDS: No TDS deduction on interest or maturity amount
  • Wealth Tax: PPF balance is exempt from wealth tax

PPF Account Rules and Regulations

Account Opening

  • Can be opened at post offices or banks
  • Minimum initial deposit: ₹500
  • Can be opened in name of minors too
  • Single account per person allowed

Contribution Rules

  • Minimum: ₹500 per year
  • Maximum: ₹1,50,000 per year
  • Maximum 12 installments per year
  • If minimum not deposited, account becomes inactive

PPF Withdrawal Rules

  • Partial Withdrawal: Allowed from 7th year onwards (up to 50% of balance)
  • Complete Withdrawal: Allowed after 15-year maturity period
  • Extension Period: Can extend in 5-year blocks after maturity
  • Extension Options: With or without continued contributions
  • Premature Closure: Only allowed in specific circumstances (medical, education)

PPF vs Other Tax-Saving Investments

PPF

  • EEE tax benefits
  • Government guarantee
  • 15-year lock-in
  • 7.1% interest rate

ELSS

  • EEE tax benefits
  • Market-linked returns
  • 3-year lock-in
  • Higher potential returns

NSC

  • EET tax benefits
  • Government guarantee
  • 5-year lock-in
  • 6.8% interest rate

Who Should Invest in PPF?

  • Risk-Averse Investors: Those seeking safe, guaranteed returns
  • Tax Planning: Individuals looking for tax-saving investments under Section 80C
  • Retirement Planning: Building a corpus for retirement with tax benefits
  • Long-term Goals: Investors with 15+ year investment horizon
  • Conservative Portfolio: Adding stability to investment portfolio

Tips for Maximizing PPF Returns

  • Invest Early: Deposit between 1st-5th of each month for maximum interest
  • Annual Investment: Invest maximum ₹1,50,000 for full tax benefits
  • Early Start: Open PPF account early in financial year for compounding benefit
  • Regular Contributions: Don't skip yearly contributions to keep account active
  • Extension Strategy: Consider extending PPF after 15 years for continued tax-free growth

Common PPF Myths

  • Myth: PPF has low returns
    Reality: Tax-free returns make PPF effective post-tax investment
  • Myth: Money is locked for 15 years
    Reality: Partial withdrawal allowed from 7th year
  • Myth: Only for government employees
    Reality: Available to all Indian residents
  • Myth: Interest rate keeps changing
    Reality: Rate fixed annually, announced by government
PPF Calculator