PPF Calculator

Fifteen years of ₹1.5 lakh, entirely tax-free

Deposit the full ₹1,50,000 every year for the mandatory fifteen years at the current 7.1% and the account matures at ₹40,68,209. You will have paid in ₹22,50,000; the remaining ₹18,18,209 is interest, and — this is the part that has no equivalent anywhere else in the Indian savings landscape — you will pay no tax on any of it.

The Public Provident Fund is a savings scheme run by the central government through banks and post offices. The sovereign guarantees it, so there is no credit risk of the kind an FD at a small bank carries. The rate is notified quarterly by the Finance Ministry rather than set by a bank competing for your money, which means it moves for policy reasons and applies to every PPF account in the country simultaneously.

What makes it distinctive is its tax status: EEE, or exempt-exempt-exempt. The deposit qualifies for deduction under Section 80C, the interest credited each year is untaxed, and the maturity proceeds are untaxed. Very little else in India is EEE — EPF and Sukanya Samriddhi are the main company it keeps. A fixed deposit paying a *higher* headline rate can easily deliver a lower return after tax, which is the comparison that actually matters and the one most people skip.

How the balance compounds

PPF interest compounds annually, on a balance that grows by your deposit each year:

Balance at end of year = (previous balance + this year's deposit) × (1 + r)

Run fifteen times, that is all there is to it. The first year's deposit compounds for fifteen years, the last for one — so, as with any recurring investment, the early contributions do a disproportionate share of the work.

There is an important wrinkle the annual formula hides. Interest is actually credited on the lowest balance between the 5th and the last day of each month. Deposit on the 3rd of April and that money earns interest for the whole year; deposit the same amount on the 6th and it earns nothing for April. Over fifteen years, consistently funding the account before the 5th of April rather than at the end of March the following year is worth a meaningful amount — one of the few genuinely free optimisations available in personal finance.

Year by year, at ₹1.5 lakh a year

Take the full annual limit at 7.1%:

Year 1. Balance (0 + 1,50,000) × 1.071 = ₹1,60,650.

Year 2. (1,60,650 + 1,50,000) × 1.071 = ₹3,32,706.

Year 3. (3,32,706 + 1,50,000) × 1.071 = ₹5,16,978.

By year 10 the balance has reached roughly ₹21,66,000 against ₹15,00,000 deposited — interest has contributed about ₹6.66 lakh. By year 15 the account holds ₹40,68,209 against ₹22,50,000 deposited.

Notice the shape. In year one, interest was ₹10,650 against a ₹1,50,000 deposit. In year fifteen, the interest credited alone is roughly ₹2,70,000 — nearly twice the annual deposit. The account has crossed the point where it grows faster from compounding than from your contributions, and this is the argument for extending rather than closing it.

Extending in five-year blocks. At maturity you may extend indefinitely, with or without further contributions. Continuing at ₹1.5 lakh a year takes the balance to ₹49,99,109 at year 17, ₹60,66,889 at year 19, and ₹66,58,288 at year 20. The last five years of a twenty-year account add about ₹26 lakh, of which only ₹7.5 lakh is fresh deposits.

Who should be using one

Anyone with a 30-year horizon who wants a guaranteed floor. PPF is the fixed-income anchor an equity-heavy portfolio needs, with a better post-tax return than a comparable FD.

Taxpayers in the old regime needing 80C. The deduction comes on top of the tax-free interest. Under the new regime there is no 80C deduction, which changes the case considerably — PPF is then competing on its 7.1% tax-free return alone, still respectable but no longer subsidised.

The self-employed, who have no EPF and therefore no other EEE retirement vehicle.

Parents, who can open an account for a minor child, though deposits across your own and the child's accounts are capped at ₹1.5 lakh in total, not ₹1.5 lakh each.

It suits you poorly if the money might be needed soon. The lock-in is genuine: fifteen financial years, with partial withdrawal allowed only from year seven and a loan facility between years three and six. Treat every rupee deposited as gone until then.

Reading your maturity figure

The maturity value assumes today's 7.1% holds for the entire term, which it will not. The rate is reviewed every quarter and has ranged from about 7.1% to 12% over the scheme's life; it has drifted downward for a decade. Re-run the projection at 6.5% to see your downside — a fifteen-year, ₹1.5 lakh account matures around ₹37.2 lakh at that rate, roughly ₹3.5 lakh less.

The interest figure is the number to compare against alternatives, because it is genuinely net. To match a 7.1% tax-free return, a taxable FD would need to pay about 10.1% to a 30%-slab taxpayer. No bank is offering that. Judged post-tax rather than on the poster rate, PPF is currently one of the strongest guaranteed-return instruments available to an Indian resident.

What the figure does not adjust for is inflation. At 6% inflation, ₹40.68 lakh in fifteen years has roughly the purchasing power of ₹17 lakh today — less than the ₹22.5 lakh you deposited. PPF reliably beats inflation by a small margin after tax; it does not build wealth at equity's pace, and an all-PPF retirement plan will fall short.

Mistakes that cost real money

Depositing after the 5th of the month. Interest keys off the lowest balance between the 5th and month end. Fund the account in the first days of April to capture a full year.

Leaving it to March. A last-minute 80C deposit in late March earns essentially no interest for that year, while the same money deposited the previous April earns a full year's.

Assuming the ₹1.5 lakh limit is per account. It is per person, aggregated across your own account and any minor's account you operate.

Letting the account lapse. Missing the ₹500 annual minimum makes the account dormant; reviving it costs ₹50 a year plus the missed minimums, and no withdrawals or loans are possible while it is inactive.

Expecting liquidity. Partial withdrawal is permitted only from year seven, capped at 50% of the balance at the end of the fourth preceding year. It is not an emergency fund.

Holding more than one account. A second PPF account in your own name is not permitted; if one is opened by mistake it is deactivated and earns no interest until merged.

Continuing to deposit in the new regime without re-checking the maths. Without 80C, PPF must justify itself purely on its tax-free 7.1%. That is often still the right call for the safe portion of a portfolio, but it deserves a deliberate decision rather than habit.

Treating PPF as the whole retirement plan. A maxed-out account for thirty-five years is a substantial asset, but its real return after inflation is only about one percentage point a year. PPF is best understood as the guaranteed floor beneath a portfolio — the part that must not fall — with equity carrying the growth. Investors who route their entire long-term savings through PPF because it feels safe usually discover the shortfall too late to fix it, which is a different kind of risk from the one they were avoiding.