🏦 PPF Calc India

PPF

Public Provident Fund (PPF) is a long-term savings scheme backed by the Government of India that offers tax-free returns at 7.1% per annum with a 15-year lock-in period.

Detailed Explanation

## What Is PPF? The Public Provident Fund, commonly known as PPF, is a savings scheme introduced by the Government of India in 1968. It was created under the Public Provident Fund Act to encourage small savings among Indian residents while providing attractive tax benefits. ## How PPF Works You open a PPF account at any designated bank or post office and deposit between Rs 500 and Rs 1,50,000 per financial year. The government pays interest (currently 7.1% per annum) on your balance, compounded annually. Your money is locked in for 15 years, after which you can withdraw the full amount tax-free or extend in 5-year blocks. ## Key Features - **Interest rate**: 7.1% per annum (revised quarterly by the government) - **Minimum deposit**: Rs 500/year - **Maximum deposit**: Rs 1,50,000/year - **Tenure**: 15 years (extendable in 5-year blocks) - **Tax status**: EEE (Exempt-Exempt-Exempt) under Section 80C - **Risk**: Zero (sovereign guarantee from Government of India) - **Eligibility**: Any Indian resident individual ## Who Should Invest PPF suits conservative investors, salaried individuals looking for 80C tax deductions, and anyone who wants a guaranteed, risk-free return. It's especially powerful for people in the 30% tax bracket, where the tax-free 7.1% equates to roughly 10.3% pre-tax returns. Use our [PPF calculator](/) to see how your deposits grow over 15 years.

See it in practice

Use our free PPF Calculator to see how ppf affects your investment returns.

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Related Terms

EEE Status

EEE (Exempt-Exempt-Exempt) status means an investment is tax-free at all three stages: when you invest, while it earns returns, and when you withdraw at maturity.

Section 80C

Section 80C of the Income Tax Act allows Indian taxpayers to claim a deduction of up to Rs 1,50,000 per year from their taxable income by investing in specified instruments like PPF, ELSS, and tax-saver FDs.

Compound Interest

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods, causing your money to grow exponentially over time.

Maturity Amount

The maturity amount is the total sum you receive when a PPF account completes its full tenure, including all your deposits plus accumulated compound interest.

Lock-in Period

The lock-in period is the minimum time you must keep your investment before you can withdraw. PPF has a 15-year lock-in, though partial withdrawals are allowed from year 7.

Partial Withdrawal

Partial withdrawal from PPF is allowed from the 7th financial year onwards, with the maximum amount being 50% of the balance from 4 years prior or the preceding year's balance, whichever is lower.

Loan Against PPF

PPF account holders can take a loan against their PPF balance from the 3rd to 6th financial year, borrowing up to 25% of the balance from two years prior at an interest rate of PPF rate plus 1%.

PPF Extension

After the 15-year maturity, a PPF account can be extended in 5-year blocks either with continued contributions or without, allowing the corpus to keep earning tax-free interest.

Tax-Free Returns

Tax-free returns mean the gains from an investment are not subject to income tax, allowing you to keep the full amount earned without any deductions for taxes.

Risk-Free Investment

A risk-free investment is one where your principal and returns are guaranteed, typically backed by a sovereign government. PPF is considered risk-free because it carries a Government of India guarantee.

PPF Account

A PPF account is a savings account opened under the Public Provident Fund scheme at designated banks or post offices, where deposits earn 7.1% annual interest with tax benefits under Section 80C.

Annual Deposit

The annual deposit in PPF refers to the total amount contributed to a PPF account in a financial year, with a minimum of Rs 500 and a maximum of Rs 1,50,000.

Interest Rate

The PPF interest rate is the annual rate at which your PPF balance earns returns, currently set at 7.1% per annum and revised quarterly by the Government of India based on government bond yields.

Sovereign Guarantee

A sovereign guarantee means the Government of India stands behind the PPF scheme, ensuring that both your principal and accumulated interest are fully protected regardless of economic conditions.