PPF Calculator

What is PPF (Public Provident Fund)?

PPF or Public Provident Fund is a long-term savings scheme backed by the Government of India. It was introduced in 1968 to encourage small savings and provide retirement security. PPF accounts can be opened at any post office or authorized bank. The current PPF interest rate is 7.1% per annum, compounded yearly. The minimum annual deposit is Rs. 500 and the maximum is Rs. 1,50,000.

How PPF Calculation Works

PPF interest is compounded annually. Each year, the deposit made at the beginning of the year earns interest at the prevailing PPF rate. The interest is calculated on the balance at the end of each financial year. The formula used is: for each year, the balance grows as Balance = (Previous Balance + Yearly Deposit) x (1 + r), where r is the annual interest rate in decimal. The maturity value is the total accumulated balance at the end of the tenure.

PPF Lock-in Period and Extensions

PPF has a mandatory lock-in period of 15 years. After 15 years, you can either withdraw the entire amount or extend the account in blocks of 5 years. Partial withdrawals are allowed from the 7th financial year onwards. Loans against PPF balance can be taken between the 3rd and 6th financial year.

Tax Benefits of PPF

PPF enjoys EEE (Exempt-Exempt-Exempt) tax status, making it one of the most tax-efficient investment options in India. The yearly deposit qualifies for deduction under Section 80C of the Income Tax Act (up to Rs. 1,50,000). The interest earned is completely tax-free. The maturity amount is also fully exempt from income tax. This triple exemption makes PPF an excellent choice for conservative, long-term investors.

Frequently Asked Questions

What is the current PPF interest rate?

The current PPF interest rate is 7.1% per annum, compounded yearly. The rate is reviewed and set by the Government of India every quarter.

Can I open a PPF account for my child?

Yes, a parent or guardian can open a PPF account in the name of a minor child. However, the combined deposit in the parent's and child's PPF accounts cannot exceed Rs. 1,50,000 per financial year for 80C benefit.

Can I withdraw PPF before maturity?

Partial withdrawals are permitted from the 7th financial year onwards. Premature closure is allowed only in specific cases such as serious illness or higher education, subject to conditions. The full amount can be withdrawn only after completing 15 years.