PPF Calculator

The Public Provident Fund is a government-backed savings account with a 15-year term. It is popular because its interest is exempt from income tax, and so is the money you withdraw at maturity. The interest rate is set by the government and reviewed every quarter. The part that surprises many savers is that when you deposit matters. This page models the three common patterns and shows how much they differ.

How interest is worked out

PPF interest is calculated each month on the lowest balance in the account between the 5th and the last day of the month. It is added up over the financial year and credited once, on 31 March. So money in the account on the 5th earns for that month, and money paid in after the 5th earns only from the next month. A deposit made by 5 April earns interest for all twelve months of that year; one made on 31 March earns nothing for the year.

The three timings

The page offers one deposit a year by 5 April, which is the best for a yearly saver; a deposit every month by the 5th, which suits a salaried person; and one deposit at the end of the year, the worst case. A yearly lump sum on 5 April is better than monthly instalments of the same total, because the money arrives earlier. If you can only save monthly, deposit before the 5th each month so that the month counts.

A worked example

The default is 1,50,000 a year for 15 years at 7.1% with a deposit by 5 April. The balance at the end is 40,68,209 from 22,50,000 deposited, so interest is 18,18,209, or 44.7% of the total. The first year earns 10,650, the second 22,056 and the third 34,272, and in year 15 the interest is 2,69,695. If you deposit 12,500 each month instead, the balance is 39,44,599. If you deposit only at the end of each year, it is 37,98,515, with no interest in year one. The difference between the best and worst timing is about 2.7 lakh.

Tax treatment

For an individual, the interest on PPF and the maturity amount are tax-free, and deposits up to 1,50,000 a year qualify for a deduction under section 80C in the old tax regime. That combination is known as EEE, exempt at each stage. The limit of 1,50,000 a year applies to the sum of all your PPF deposits and covers deposits made for a minor, so the page limits the yearly deposit to that amount.

After 15 years

The account matures after 15 financial years and can be extended in blocks of five years, with or without further deposits. The page lets you enter a longer period, up to 60 years, and keeps depositing throughout. If you extend, the balance after year 15 is shown in the results, so you can compare with the larger total.

Edge cases

A deposit below 500 or above 1,50,000 is rejected with a message. A rate of zero returns only what you deposited. The page assumes the same deposit each year; for changing amounts, add up the yearly deposits yourself or use separate runs.

Limits

The rate is constant, which it is not in reality. Loans against the balance, partial withdrawals after the sixth year, premature closure and the rules for new accounts are not modelled, and the rules of the scheme can change. Check the post office or bank for the rate in force when you deposit.

Related tools

• SSY Calculator works the same way for the girl-child scheme, with a different rate and term.
• EPF Calculator projects the provident fund built through your salary.
• FD Calculator shows what a taxable bank deposit would give in comparison.
• 80C Tax Calculator tracks how much of the yearly deduction limit your deposits use.