PPF Calculator

What is the interest rate on PPF?

The current interest rate is 7.1% p.a. (for the quarter 1 July 2021 to 30 September 2021; continued from the previous quarter) that is compounded annually. The Finance Ministry set the interest rate every year, which is paid on 31st March. The interest is calculated on the lowest balance between the close of the fifth day and the last day of every month. Further, use our PPF calculator to figure out the returns you can expect on investing a certain amount in a PPF account..

Four essential features of PPF

Tenure:

The PPF has a minimum tenure of 15 years, which can be extended in blocks of 5 years as per your wish.

Investment Limits:

PPF allows a minimum investment of Rs 500 and a maximum of Rs 1.5 lakh for each financial year. Investments can be made in a lump sum or in a maximum of 12 installments.

Opening Balance:

The account can be opened with just Rs 100. Annual investments above Rs 1.5 lakh will not earn interest and will not be eligible for tax saving.

Deposit Frequency:

Deposits into a PPF account has to be made at least once every year for 15 years.

Mode of deposit:

The deposit into a PPF account can be made either by way of cash, cheque, Demand Draft or through an online fund transfer.

Nomination:

A PPF account holder can designate a nominee for his account either at the time of opening the account or subsequently.

Joint accounts:

A PPF account can be held only in the name of one individual. Opening an account in joint names is not allowed.

Risk factor:

Since PPF is backed by the Indian government, it offers guaranteed, risk-free returns as well as complete capital protection. The element of risk involved in holding a PPF account is minimal.

Who is eligible to invest in PPF

• Any Indian citizen can invest in PPF.

• One citizen can have only one PPF account unless the second account is in the name of a minor.

• NRIs and HUFs are not eligible to open a PPF account.

PPF withdrawal

As a rule, one can fully withdraw the PPF account balance only upon maturity i.e. after the completion of 15 years. Upon completion of 15 years, the entire amount standing to the credit of an account holder in the PPF account along with the accrued interest can be withdrawn freely and the account can be closed.
However, if account holders are in need of funds, and wish to withdraw before 15 years, the scheme permits partial withdrawals from year 7 i.e. on completing 6 years.
An account holder can withdraw prematurely, up to a maximum of 50% of the amount that is in the account at the end of the 4th year (preceding the year in which the amount is withdrawn or at the end of the preceding year, whichever is lower). Further, withdrawals can be made only once in a financial year.

PPF withdrawal

As a rule, one can fully withdraw the PPF account balance only upon maturity i.e. after the completion of 15 years. Upon completion of 15 years, the entire amount standing to the credit of an account holder in the PPF account along with the accrued interest can be withdrawn freely and the account can be closed.
However, if account holders are in need of funds, and wish to withdraw before 15 years, the scheme permits partial withdrawals from year 7 i.e. on completing 6 years.
An account holder can withdraw prematurely, up to a maximum of 50% of the amount that is in the account at the end of the 4th year (preceding the year in which the amount is withdrawn or at the end of the preceding year, whichever is lower). Further, withdrawals can be made only once in a financial year.

What are the tax benefits of investing in PPF?

PPF is one investment vehicle that falls under the Exempt-Exempt-Exempt (EEE) category. This, in other words, means that all deposits made in the PPF are deductible under Section 80C of the Income Tax Act. Furthermore, the accumulated amount and interest is also exempt from tax at the time of withdrawal. It is important to note that a PPF account cannot be closed before maturity. A PPF account, however, can be transferred from one point of designation to another. But, do remember that a PPF account cannot be closed prematurely. Only in the case of the account holder’s demise can the nominee’s file for the closure of the account.