PPF Calculator

The Public Provident Fund (PPF) is a long-term, government-backed savings scheme in India offering tax-free returns and Section 80C tax deductions. It has a fixed 15-year lock-in period with optional 5-year extensions.

Formula: Maturity Value = P × [((1 + r)^n − 1) ÷ r] × (1 + r)

This is the future value of an annuity due formula (payments at the start of each period).

What each variable means:

• P — annual contribution (minimum ₹500, maximum ₹1,50,000 per year)
• r — annual interest rate (set quarterly by the Government of India; has ranged from 7.1% to 12% historically)
• n — number of years (minimum 15)

Interest calculation rule: Interest is calculated monthly but credited annually to your PPF account. The interest is computed on the lowest balance between the 5th and the last day of each month — so always deposit before the 5th of the month to maximize returns.

Worked example: Annual contribution: ₹1,50,000 (maximum allowed) Interest rate: 7.1% (current rate as of 2024) Tenure: 15 years

Maturity Value = 1,50,000 × [((1.071)^15 − 1) ÷ 0.071] × 1.071 = 1,50,000 × [(2.8509 − 1) ÷ 0.071] × 1.071 = 1,50,000 × [26.069] × 1.071 = 1,50,000 × 27.918 = ₹41,87,700 (approx.)

Total invested = 15 × ₹1,50,000 = ₹22,50,000 Total interest earned = ₹41,87,700 − ₹22,50,000 = ₹19,37,700 — 100% tax-free

Tax advantages: PPF follows the EEE (Exempt-Exempt-Exempt) model:

1. Contributions are deductible under Section 80C (up to ₹1.5 lakh)
2. Interest earned is tax-free
3. Maturity amount is tax-free

This makes PPF one of the most tax-efficient investment vehicles available in India.