How to use the PPF calculator
- Enter your Yearly contribution — the statutory maximum is ₹1,50,000 a year.
- Enter the Interest rate; the government reviews it each quarter.
- Set the Tenure. PPF matures at 15 years and can be extended in five-year blocks.
- Read the maturity value and the split between your money and the interest.
Worked example
Contributing ₹1,50,000 a year at 7.1% for 15 years builds a maturity value of roughly ₹40.7 lakh. You put in ₹22.5 lakh; the remaining ₹18.2 lakh is interest, and it is entirely tax-free.
How PPF interest is calculated
The balance is credited with interest once a year, on 31 March. A contribution made in a financial year earns interest from that year, so money deposited in April earns a full year while money deposited in March earns a full year too — one of the few places where the timing of a deposit inside the year does not reduce the interest.
Balancen = (Balancen−1 + Contribution) × (1 + r)
Because each contribution compounds for the remaining years of the term, early contributions do far more work than late ones. A rupee contributed in year one compounds fifteen times; the same rupee in year fifteen compounds once.
The tax advantage
PPF is taxed on an exempt-exempt-exempt basis. The contribution qualifies for deduction, the interest accrues free of tax and the maturity proceeds are not taxed. A taxable deposit would need a materially higher headline rate to match it.
PPF rules worth knowing
- Contribution window. Minimum ₹500 a year, maximum ₹1,50,000 a year across all your own accounts.
- Only one account. You may hold one PPF account in your own name; a second cannot be opened.
- Partial withdrawal. Allowed from the seventh financial year, subject to limits tied to the balance.
- Loan against PPF. Available between the third and sixth financial years.
- Extension. After 15 years you can extend in blocks of five, with or without further contributions.
- Maturity is not automatic. The account continues to earn interest until you close it or extend deliberately.
PPF versus other small savings
PPF rewards long, patient contributions with a fully tax-free outcome. Equity funds carry real volatility but a higher expected return and different tax treatment. For the debt portion of a portfolio, the tax-free certainty of PPF is hard to beat.