PPF Calculator Guide: Rules, Returns & Why It's a Tax-Free Powerhouse

Public Provident Fund (PPF) is one of the few investments in India with EEE tax status — Exempt on investment, Exempt on interest, Exempt on maturity. No other common instrument offers this triple tax benefit, which is why PPF remains a cornerstone of long-term, risk-free financial planning.

Key PPF Rules at a Glance

RuleDetail
Lock-in period15 years (extendable in blocks of 5 years)
Minimum annual deposit₹500
Maximum annual deposit₹1,50,000
Interest rateGovernment-set, revised quarterly (~7-7.5% typically)
CompoundingAnnual
Tax statusEEE — fully tax-free at every stage

How PPF Interest Is Calculated

Interest is calculated monthly on the lowest balance between the 5th and last day of each month, but credited annually at year-end. This is a key detail: deposit before the 5th of the month to earn interest for that month.

Practical tip: If you deposit your annual ₹1,50,000 lump sum on April 5th (start of financial year) rather than March 2025 (end of year), you earn a full year of interest on it instead of losing months of compounding.

PPF Growth Example (₹1,50,000/year @ 7.1%)

After YearsTotal DepositedMaturity Value
5₹7,50,000₹9,03,177
10₹15,00,000₹21,71,321
15 (maturity)₹22,50,000₹40,68,209

At maturity, you've deposited ₹22.5L and received nearly ₹40.7L — completely tax-free. Compare that to an equivalent FD, where the ~₹18L in interest would be fully taxable at your slab rate.

Extending PPF Beyond 15 Years

After the initial 15-year lock-in, you have three choices:

  1. Withdraw everything and close the account
  2. Extend with fresh contributions — in blocks of 5 years, continuing to deposit and earn tax-free interest
  3. Extend without fresh contributions — the existing balance keeps earning interest, but you can't add new money

Many long-term investors extend repeatedly, letting the compounding continue for 20, 25, or even 30 years.

Partial Withdrawal Rules

You can make one partial withdrawal per year, starting from the 7th financial year, up to 50% of the balance at the end of the 4th year (or immediately preceding year, whichever is lower).

PPF vs FD vs SIP: Where PPF Fits

AspectPPFFDSIP (Equity)
Return~7-7.5%, tax-free~6.5-7.5%, taxable~10-14% avg, market risk
RiskZero (govt-backed)Zero (bank-backed)Moderate-high
LiquidityLow (15-yr lock-in)Flexible tenuresHigh (redeemable anytime)
Best forLong-term, risk-free, tax-savingShort-term safe parkingLong-term wealth growth

Smart approach: Many financial planners recommend PPF as the "safe anchor" of a portfolio (especially for retirement), combined with SIP for higher long-term growth — not one instead of the other.

Frequently Asked Questions

Q: Can I open multiple PPF accounts?No, an individual can hold only one PPF account (except one additional account can be opened on behalf of a minor child).
Q: What happens if I miss a yearly deposit?The account becomes "inactive" — you'll need to pay a penalty (₹50/year) plus the minimum ₹500 deposit for each missed year to reactivate it.
Q: Is PPF interest rate fixed for 15 years?No, it's revised quarterly by the government based on prevailing bond yields, though it has historically stayed in the 7-8% range for years at a time.
Q: Can NRIs open a PPF account?No, NRIs cannot open new PPF accounts, though NRIs who opened one while resident can continue it until maturity under certain conditions.

See exactly how your PPF grows over 15+ years. Use our free PPF Calculator →

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