What is the Public Provident Fund (PPF)?
The Public Provident Fund (PPF) is a long-term, government-backed savings scheme in India. It offers attractive interest rates and tax benefits under Section 80C of the Income Tax Act. PPF is ideal for individuals looking for safe and stable returns with compounded interest over a 15-year lock-in period.
How PPF Interest is Calculated
The PPF interest is compounded annually, and interest is calculated each month on the lowest balance between the 5th and the end of the month. The formula used is:
A = P × (1 + r)n
Where:
- A = Maturity Amount
- P = Yearly contribution
- r = Annual interest rate (as a decimal)
- n = Number of years
How the PPF Calculator Works
This calculator helps estimate your final corpus after 15 years (or more, if extended). It considers:
- Your annual contribution
- The current PPF interest rate
- Tenure of investment (minimum 15 years, extendable in blocks of 5 years)
Key Benefits of Investing in PPF
- Safe Investment: Backed by the Government of India, it offers guaranteed returns.
- Tax Benefits: Contributions are eligible for deduction under Section 80C. Interest and maturity amounts are also tax-free.
- Compounding Power: Annual compounding ensures steady and significant growth over time.
- Partial Withdrawals: Allowed after 5 years under certain conditions.
Important PPF Account Rules
- Minimum annual deposit: ₹500
- Maximum annual deposit: ₹1.5 lakh
- Tenure: 15 years (extendable)
- One contribution per month is allowed (max 12 per year)
- Loan available from 3rd to 6th year
Example of PPF Maturity and Growth
| Yearly Contribution | Interest Rate | Tenure | Total Investment | Maturity Amount |
|---|---|---|---|---|
| ₹1,50,000 | 7.1% | 15 Years | ₹22,50,000 | ₹40,68,209 |
PPF is one of the most secure long-term investments in India, ideal for retirement planning and tax-saving goals.
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