What is a PPF Account?

Public Provident Fund (PPF) is a popular long-term savings-cum-tax-saving scheme backed by the Government of India, offering attractive interest rates and full tax exemption under Section 80C.

What is the lock-in period for PPF?

A PPF account has a mandatory lock-in period of 15 years. Post that, it can be extended in blocks of 5 years indefinitely.

Free Public Provident Fund (PPF) Calculator

Project your secure tax-free wealth and compounding interest on annual government PPF deposits.

Annual PPF Investment (Max ₹1.5 Lakhs)

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What is Public Provident Fund (PPF)?

The Public Provident Fund (PPF) is a popular long-term savings-cum-tax-saving scheme introduced by the National Savings Institute of the Ministry of Finance in 1968. Fully backed by the Central Government of India, PPF is regarded as one of the safest debt instruments available to Indian residents.

The primary objective of the PPF scheme is to encourage micro-savings among individuals and build a secure financial pool for retirement. What makes PPF exceptionally popular is its **EEE (Exempt-Exempt-Exempt)** tax status under the Indian Income Tax Act:

Exempt: The principal invested (up to ₹1.5 Lakhs per financial year) qualifies for tax deductions under Section 80C.
Exempt: The interest accumulated annually is completely tax-free.
Exempt: The final maturity amount withdrawn after 15 years is entirely exempt from income tax.

Core Features & Lock-in Guidelines

Maturity Period: PPF accounts have a mandatory lock-in period of 15 financial years.
Extension Limit: Post maturity, investors can extend the account in blocks of 5 years indefinitely, either with fresh deposits or without making any new contributions.
Investment Limits: You can deposit a minimum of ₹500 and a maximum of ₹1,50,000 per financial year. These deposits can be made as a one-time lump sum or in monthly installments.
Government Interest Rates: The interest rate is declared quarterly by the government. The current PPF interest rate is fixed at 7.1% p.a. and is compounded annually.

How is PPF Interest Computed?

Although PPF interest is compounded annually and credited to the account at the end of every financial year (March 31st), it is actually **calculated monthly**.

Crucial Trick for Maximum Interest: According to PPF rules, interest is calculated on the lowest balance in your PPF account between the **5th day and the last day** of every month. Therefore, if you are making monthly contributions, always make sure to transfer or deposit the cash **before the 5th of the month** so that you earn interest on that month's contribution!

Frequently Asked Questions (FAQs)

Any resident Indian citizen can open a PPF account. Joint accounts are not allowed, but parents can open accounts on behalf of their minor children. Non-Resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible to open new PPF accounts.

EEE stands for Exempt-Exempt-Exempt. This means the principal invested is tax-exempt under Section 80C, the interest earned is tax-exempt, and the final maturity amount is completely exempt from income tax.

Partial withdrawals are allowed starting from the 7th financial year of opening the account, subject to specific limits based on your account balance. Complete premature closure is permitted only under emergency medical conditions or higher education needs after 5 years, with a 1% interest rate penalty.

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