PPF Calculator

What Is PPF — and Why Do So Many Indians Swear By It?

PPF stands for Public Provident Fund. It is a long-term savings scheme backed by the Government of India, first introduced in 1968. In over five decades of existence, it has never missed an interest payment, never defaulted, and never been taxed — not on the investment, not on the interest, and not when you finally withdraw your money. That trifecta earns it the label EEE (Exempt–Exempt–Exempt) under the Income Tax Act.

You put in anywhere from ₹500 to ₹1.5 lakh every year. The government pays you a declared interest rate (currently 7.1% p.a. compounded annually for Q1 FY 2025–26). After 15 years, the entire accumulated amount — principal plus every rupee of interest — comes back to you, completely tax-free.

For a salaried person in the 30% tax bracket, this 7.1% rate is equivalent to earning nearly 10.1% on a fully taxable instrument. That is the quiet power of EEE status — it isn't glamorous, but it consistently beats most fixed-income alternatives on an after-tax basis.

How Is PPF Maturity Calculated? The Formula Explained

Unlike a mutual fund that marks to market daily, PPF uses a clean, government-declared annual compounding formula. The interest is calculated on the minimum balance between the 5th and last day of every month, then credited to your account at the end of the financial year (31 March).

In plain English: your yearly deposit grows at the declared rate, compounded once a year. Each year's deposit contributes its own chain of compounding — the deposit made in year 1 compounds for 15 years, year 2 compounds for 14 years, and so on.

The 5th-day rule — the most important thing no one tells you

PPF interest is calculated on the minimum balance between the 5th and last day of each month. This means: if you deposit on April 6th instead of April 1st–5th, you lose that month's interest entirely. Over 15 years, depositing before the 5th of April each year can add ₹20,000–₹40,000 to your final corpus on a ₹1.5L annual deposit.

You put in ₹22.5 lakh and receive ₹40.68 lakh — all of it tax-free. In the same period, a comparable taxable FD at 7% would yield only around ₹36–37 lakh before tax and roughly ₹31–32 lakh after tax (at 30% slab). That difference of ₹8–9 lakh is the compounded value of your EEE status.

PPF Rules at a Glance (FY 2025–26)

⚠️ Section 80C note: The ₹1.5L 80C deduction is available only under the old tax regime. Interest and maturity remain tax-free under both old and new regimes — this is the unique strength of PPF over most other instruments.

The Power of PPF Extension — Numbers That Will Surprise You

Most people treat PPF as a 15-year fixed scheme and withdraw on maturity. That is a perfectly valid choice — but it means leaving a lot of compounding power on the table. After 15 years, your corpus is already large, and the compounding in years 16–20 works on a much bigger base.

Extension with vs without fresh contributions

You have two options when extending. The "with contribution" extension lets you keep depositing up to ₹1.5L/year in fresh 5-year blocks while continuing to earn interest on the full balance. This is powerful but requires you to keep investing. The "without contribution" extension simply lets your existing corpus keep earning 7.1% tax-free — you don't add any money, but you don't lose the tax-free interest status either.

If you don't actively need the funds and have no better use for the money (post retirement, for instance), the "without contribution" extension is one of the best risk-free wealth-preservation options available in India.

PPF vs ELSS vs FD vs NPS — Which One Is Right for You?

PPF is not always the best choice for everyone — it depends heavily on your tax bracket, risk appetite, liquidity needs, and investment horizon. Here is an honest side-by-side comparison for FY 2025–26:

The bottom line: PPF is unbeatable for zero-risk, long-term wealth accumulation if you're in the 20–30% tax bracket and have the patience for 15 years. If you need higher returns and can tolerate volatility, ELSS over 10+ years has historically delivered meaningfully more. Many savvy investors hold both — PPF for the safe, guaranteed tax-free base, and ELSS for the equity upside.

6 Things Most PPF Investors Get Wrong

Frequently Asked Questions About PPF

• Can I open more than one PPF account? ▼
  No — you can hold only one PPF account in your own name. If you accidentally open a second account, the second account will not earn any interest, and the amount deposited in it will be returned without interest. The only exception is that a parent or guardian can operate a PPF account on behalf of a minor child, but the combined deposit limit across both accounts remains ₹1.5 lakh per year.
• What happens to my PPF account if I become an NRI during the 15-year period? ▼
  If you had a PPF account as a resident Indian and later become an NRI, you can continue to maintain and operate the existing account until its maturity (15 years from the original date of opening). You can continue depositing and earning interest. However, once the account matures, it cannot be extended — it must be closed. NRIs cannot open new PPF accounts. This is a common planning consideration for people who move abroad mid-career.
• Is PPF interest really tax-free even under the new tax regime? ▼
  Yes — absolutely. The tax-free status of PPF interest and maturity proceeds is guaranteed under Section 10(11) of the Income Tax Act, which applies under both the old and new tax regimes. What changes under the new regime is the deduction on investment: the Section 80C deduction (up to ₹1.5L/year on your PPF deposits) is available only under the old regime. But once the money is in your PPF account, all future interest and the final maturity amount are tax-free regardless of which regime you choose in any given year.
• Can I withdraw PPF before 15 years? ▼
  Full premature closure is allowed only in very specific cases: serious illness of the account holder, spouse, or dependent children; higher education needs of the account holder or minor child; and change of residency status to NRI. In these cases, you can close the account after 5 complete financial years, but a 1% penalty on interest is levied. For everyone else, the account must run for 15 years. Partial withdrawals are possible from Year 7 — up to 50% of the balance at the end of Year 4 — once per year.
• What is the PPF interest rate history — has it always been 7.1%? ▼
  No — the PPF rate has varied significantly over the decades. It was as high as 12% in the 1980s and early 1990s. Through the 2000s it gradually fell. From FY 2020–21, the rate was reduced to 7.1% and has stayed there through FY 2025–26. The rate is reviewed quarterly by the Ministry of Finance, typically aligned with G-sec yields plus a small premium. While many investors hope for an increase, the government has kept it stable for over four years now. For planning purposes, the current 7.1% is the appropriate assumption unless officially revised.
• Should I extend my PPF with or without fresh contributions? ▼
  The right choice depends on your cash flow and tax situation. Extending with fresh contributions is better if you are still earning and want to continue claiming 80C deductions (old regime) while building your corpus further — the additional deposits compound on an already large base. Extending without contributions is ideal if you are retired or don't need the 80C deduction (perhaps you're on the new tax regime), and simply want your existing corpus to keep growing at 7.1% tax-free. One important note: if you miss applying for an extension within one year of maturity, you cannot make fresh contributions in that extension block — plan proactively.
• Is my PPF money safe if a bank fails? ▼
  Yes — completely. PPF is a government of India savings scheme, not a bank product. Even if you hold your PPF account with a private bank like ICICI or HDFC, the account is operated by the National Savings Institute under the Ministry of Finance. It is sovereign-guaranteed, meaning it is backed by the full faith and credit of the Indian government. The DICGC insurance limit of ₹5 lakh (which covers bank deposits) does not apply to PPF — your entire PPF balance is protected regardless of its size or which bank holds the account.
• How accurate is this PPF calculator? ▼
  This calculator assumes a fixed interest rate for the entire investment period and annual compounding — which matches the actual PPF mechanism. Results will match your bank's or post office's PPF statement very closely, with minor differences due to exact deposit dates within the year. The calculator assumes deposits are made at the start of each year (ideal scenario). If you deposit mid-year or after the 5th of a month, actual interest will be slightly lower. For long-term planning purposes, the calculator is accurate and suitable for all financial decisions involving PPF.