What is PPF?
The Public Provident Fund is a government savings scheme introduced to promote long-term financial discipline. It offers attractive interest, tax-free returns, and is backed by the Government of India, making it a safe investment for conservative savers.
How is PPF Interest Calculated?
Interest is calculated every month on the lowest balance between the 5th and the last day of the month. However, interest is compounded annually and credited at the end of the financial year. Depositing before the 5th ensures maximum benefit.
Benefits of PPF Investment
- Safe and secure investment backed by the government
- Interest and maturity amount are completely tax-free
- Eligible for deduction under Section 80C of the Income Tax Act
- Encourages long-term savings discipline
- Flexible extension after 15 years in 5-year blocks
How to Use the PPF Calculator
To estimate your PPF maturity amount, input your annual investment amount, tenure (typically 15 years), and the current interest rate. The calculator will project your maturity value and interest earned over the period.
Frequently Asked Questions (FAQs)
What is the Public Provident Fund (PPF)?
PPF is a popular long-term savings scheme with a tenure of 15 years, offering guaranteed returns and tax exemptions. It's suitable for conservative investors and salaried individuals seeking safe investment options.
How is interest calculated in PPF?
Interest is calculated monthly on the lowest balance between the 5th and end of the month. It’s compounded annually and credited on March 31st every year. Deposits before the 5th of the month earn more interest.
Can I invest more than ₹1.5 lakh in a financial year?
No. The maximum amount that can be deposited in a PPF account in one financial year is ₹1.5 lakh. Any excess deposit will not earn interest and is refunded by the bank or post office.
What are the withdrawal rules?
Partial withdrawals are allowed after 7 years for emergencies. Full withdrawal can be done only at the end of the 15-year term. You can extend it further in blocks of 5 years with or without contributions.
Is the maturity amount from PPF taxable?
No, PPF maturity is completely tax-free. Both the interest earned and the final amount received at maturity are exempt from tax under the EEE (Exempt-Exempt-Exempt) rule.