PPF Calculator
Public Provident Fund returns and tax savings.
* Max PPF investment is ₹1.5L/year. Lock-in 15 Years.
Summary
The Public Provident Fund (PPF) is a government-backed, long-term small savings scheme that has remained a favorite of Indian investors for decades. Its popularity stems from its unique combination of safety, decent returns, and unmatched tax efficiency.
Whether you are a risk-averse conservative investor or a high-flying equity trader, PPF deserves a spot in your portfolio as the "debt anchor"—the money you know will be there 15 years down the line, no matter what happens to the economy.
⭐ The Holy Grail: E-E-E Tax Status
PPF is one of the very few instruments in India that enjoys the Exempt-Exempt-Exempt status:
- Exempt (Entry): The amount you invest (up to ₹1.5 Lakh/year) is deductible from your taxable income under Section 80C.
- Exempt (Accumulation): The interest earned every year is NOT taxed. It compounds freely.
- Exempt (Exit): The massive maturity corpus you withdraw after 15 years is 100% tax-free.
The "5th of the Month" Strategy
This is the single most important rule for PPF investors. Interest on PPF is calculated on the lowest balance in your account between the 5th and the last day of the month.
Scenario:
- • You deposit ₹1.5 Lakh on April 3rd: You earn interest for April.
- • You deposit ₹1.5 Lakh on April 6th: You earn ZERO interest for April. Interest starts from May.
Pro Tip: Always set your SIP/Standing Instruction for the 1st or 2nd of the month. Over a 15-year period, this small timing difference can add ₹20,000 - ₹30,000 to your final corpus.
Liquidity & Withdrawal Rules
PPF is a long-term commitment with a 15-year lock-in. However, it is not completely illiquid:
- Loan Facility: Available from the 3rd to the 6th financial year. The loan interest is extremely low (just 1% above the prevailing PPF rate).
- Partial Withdrawal: Allowed from the 7th financial year onwards. You can withdraw up to 50% of the balance at the end of the 4th preceding year or the immediately preceding year, whichever is lower.
- Extension: After 15 years, you can extend the account in blocks of 5 years indefinitely. You can choose to extend with or without making fresh contributions.
Who should open a PPF?
PPF is ideal for:
- Self-Employed Professionals: Unlike salaried employees who have EPF, business owners need a secure retirement debt tool.
- Conservative Investors: Those who want guaranteed returns without market volatility.
- High Tax Bracket Individuals: The tax-free maturity is a huge advantage for those in the 30% slab.
Frequently Asked Questions
What is the minimum and maximum investment?
Minimum: ₹500 per year. Maximum: ₹1.5 Lakh per year. You can deposit in lump sum or installments (max 12 per year historically, though restrictions have eased).
Can I open a PPF for my minor child?
Yes, a parent/guardian can open a PPF account for a minor. However, the <strong>combined</strong> deposit limit for the parent's account and the minor's account is still ₹1.5 Lakh per year.
Is the interest rate fixed?
No. It is a floating rate, reviewed quarterly by the Ministry of Finance based on government bond yields. Historically, it ranges between 7% to 8%.
Can a PPF account be attached by courts?
No. A unique feature of PPF is that it cannot be attached by any court decree to pay off debts/liabilities, making it the ultimate financial safety net.