What is PPF (Public Provident Fund)?
PPF is a long term savings scheme backed by the Government of India. It is one of the safest investments because the returns are guaranteed and completely tax free. Any Indian resident can open a PPF account at a post office or bank.
The scheme has a lock-in period of 15 years. After that, you can extend it in blocks of 5 years, with or without further deposits.
Key features of PPF
- Interest rate: 7.1% per year (reviewed by the Government every quarter).
- Minimum deposit ₹500 and maximum ₹1,50,000 per financial year.
- Interest is compounded yearly and credited at the end of the financial year.
- Deposit qualifies for Section 80C deduction. Interest and maturity are tax free (EEE status).
- Loan facility from the 3rd year and partial withdrawal from the 7th year.
PPF calculation formula
The calculator assumes the deposit is made at the start of every year. Interest is added on the closing balance each year.
Balance(year) = [ Balance(year − 1) + Deposit ] × (1 + r)
Example: ₹10,000 deposited every year for 15 years at 7.1% gives a total investment of ₹1,50,000 and a maturity value of about ₹2,71,000.
Tip to earn maximum PPF interest
PPF interest is calculated on the lowest balance between the 5th and the last day of every month. So deposit your money before the 5th of the month, ideally in April, to earn interest for the full year.
Frequently asked questions
What is the current PPF interest rate?
The PPF interest rate is 7.1% per year, compounded yearly. The Government can revise it every quarter.
Can I withdraw PPF before 15 years?
Partial withdrawal is allowed from the 7th financial year. Premature closure is allowed after 5 years only for specific reasons like serious illness or higher education, with a 1% lower interest rate.
Is PPF interest taxable?
No. PPF interest and maturity amount are fully tax free. The yearly deposit also gives a deduction under Section 80C in the old tax regime.
Can I open more than one PPF account?
No. A person can have only one PPF account in their own name. You can open a separate account for a minor child as guardian.
What happens after 15 years?
You can withdraw the full amount, or extend the account in blocks of 5 years with or without new deposits. The balance keeps earning interest during extension.
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View allDisclaimer: This calculator is for information purposes only. Results are estimates based on the inputs you provide and do not guarantee any returns. Please consult a qualified financial advisor before making investment or tax decisions.