PPF Calculator

What is PPF?

PPF (Public Provident Fund) is a long-term savings scheme backed by the Government of India. It was introduced in 1968 under the PPF Act and is one of the most popular investment options among salaried employees, self-employed professionals, and risk-averse investors. PPF accounts can be opened at any post office or designated bank branches.

PPF is known for its triple tax exemption (EEE status): deposits qualify for deduction under Section 80C, interest earned is tax-free, and the maturity corpus is fully exempt from income tax. No other savings product in India combines government-backed safety, decent returns, and complete tax freedom in this way.

The scheme has a 15-year lock-in period, which discourages premature withdrawals and helps build long-term wealth through the power of compounding. The current interest rate is 7.1% per annum, reviewed quarterly by the government based on G-Sec yields.

How to Use This PPF Calculator

1. Enter your yearly deposit: Type the amount you plan to invest each year. The minimum is ₹500 and the maximum is ₹1,50,000 per financial year. You can also use the slider for quick adjustments.
2. Set the interest rate: The default is 7.1% (current rate). Change this to model scenarios where the rate increases or decreases over time — useful for sensitivity analysis.
3. Choose your duration: PPF has a minimum lock-in of 15 years. After maturity, you can extend in 5-year blocks. Select the appropriate duration from the dropdown.
4. Click Calculate PPF Maturity: The results show your total maturity amount, total amount deposited, and total interest earned. Scroll down to see the full year-by-year balance table.

Tip: Try the calculator with the maximum deposit of ₹1,50,000 and a 25-year period to see the compounding power of a long-term PPF strategy. The interest earned can often exceed the total amount deposited for longer durations.

PPF Calculation Formula

PPF uses annual compounding. The deposit is assumed to be made at the start of the financial year (before April 5th, ideally) to earn interest for that full year.

This formula is applied iteratively for each year of the investment period. The closing balance of year 1 becomes the opening balance for year 2, and so on. The interest credited each year grows progressively because the base balance increases — this is the essence of compounding.

Important nuance: In practice, PPF interest is calculated on the lowest balance between the 5th and the last day of each month. Depositing before the 5th of April maximises interest for that financial year. This calculator assumes the yearly deposit is made at the start of each year, which is the optimal scenario.

Parameters:

• Annual Deposit: Fixed amount contributed every year (same for all years in this calculator).
• Rate: Annual interest rate in percentage (currently 7.1%).
• n: Year number (1 to 15, or extended period).
• Balance(0): Zero — PPF starts fresh.

Example Calculations

Key PPF Rules & Features

• Who can open a PPF account: Any Indian resident individual. Non-resident Indians (NRIs) are not eligible to open new accounts, though existing accounts can be maintained until maturity at 7.1% (no further deposits).
• One account per person: A person can hold only one PPF account in their own name. Joint accounts are not allowed. However, you can open a PPF account on behalf of a minor child, and both accounts are allowed together.
• Deposit limits: Minimum ₹500, maximum ₹1,50,000 per financial year. Deposits can be made in lumpsum or up to 12 instalments. Amount in excess of ₹1.5 lakh is refunded without interest.
• Lock-in period: 15 years from the end of the financial year in which the first deposit was made. Premature closure is allowed only under specific circumstances (serious illness, higher education) after 5 years.
• Partial withdrawal: Allowed from Year 7 onwards — up to 50% of the balance at the end of Year 4 or Year 6, whichever is lower. One withdrawal per year.
• Loan facility: Available from Year 3 to Year 6 — up to 25% of the balance at end of Year 2. Loan interest is 1% above PPF rate.
• Extension: After 15 years, extend in 5-year blocks with or without contributions. With contributions, new deposits earn interest and qualify for 80C. Without contributions, the corpus continues to earn interest tax-free.
• Tax benefits: EEE status — deduction under 80C (up to ₹1.5L/year), tax-free interest, and tax-free maturity amount.

PPF vs FD vs SIP — Which is Better?

Each investment serves a different purpose. Here is a quick comparison to help you decide:

• PPF (7.1% tax-free): Best for long-term, risk-free, tax-efficient savings. The EEE tax status makes the effective post-tax return closer to 9–10% for those in the 30% bracket. Ideal for retirement planning, children's education, or building a debt foundation. Drawback: 15-year lock-in reduces liquidity.
• Fixed Deposit (6–7.5% taxable): Better liquidity (can be broken anytime with a small penalty). But interest is fully taxable as income. For someone in the 30% slab, a 7.5% FD gives an effective post-tax return of only ~5.25%. PPF is significantly better after tax for high-income earners.
• SIP in Equity Mutual Funds (12–15% historical): Far higher potential returns over 10+ years, but with market risk. Long-term capital gains above ₹1 lakh are taxed at 10–12.5%. For aggressive wealth creation, SIP beats PPF. For capital protection with guaranteed returns, PPF wins. An ideal portfolio combines both.

Recommended approach: Max out PPF every year for the tax-free, risk-free portion of your portfolio (Section 80C benefit). Invest additional savings in equity SIPs for inflation-beating growth over the long term. Use FDs only for short-term goals (1–3 years).

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