PPF Calculator

The current rate is 7.1% per annum for FY 2024-25. Interest compounds annually and is credited at the end of each financial year. The government sets this rate quarterly based on 10-year government bond yields. It has been stable at 7.1% since April 2020, the longest stretch at a single rate in recent history. For a 30% bracket taxpayer, 7.1% tax-free is the rough equivalent of 10.14% taxable. No bank FD delivers that on an after-tax basis right now.

The floor is Rs.500 per year and the ceiling is Rs.1,50,000 per year. Miss the Rs.500 minimum in any year and the account gets classified as discontinued. To revive a discontinued account you pay Rs.50 per year of non-deposit as a penalty plus deposit the Rs.500 minimum for each missed year. The maximum of Rs.1.5 lakh applies per account per person. Deposits beyond Rs.1.5 lakh in a financial year earn no interest and are returned without interest. You make the annual deposit as a single lump sum or up to 12 separate instalments across the year.

PPF is one of the few investments in India that is tax-free at all three stages. Your contribution of up to Rs.1.5 lakh per year qualifies for Section 80C deduction. The interest that accumulates over 15 years is not taxed at any point. The maturity amount that you withdraw is also completely tax-free. No TDS, no capital gains, nothing. Under the new tax regime, the 80C deduction disappears, but the interest and maturity exemptions still apply under Section 10(11). Even if you file under the new regime, the PPF account itself retains its tax-free status on accumulated corpus and maturity.

The 15-year lock-in has some flexibility built into it, though not much. A PPF loan is available from the 3rd year through the 6th year. The maximum amount is 25% of the balance at the end of year 2, and the interest rate is 1% per annum above the PPF rate, making it the cheapest loan available anywhere in India. The loan must be repaid within 36 months. Partial withdrawals start from year 7. Each year from year 7 onward, you withdraw up to 50% of the balance at the end of year 4, or 50% of the balance at the end of the preceding year, whichever is lower. Premature account closure before 15 years is only allowed in specific circumstances: treatment of a life-threatening illness, higher education expenses, or change in residential status to NRI. A 1% penalty is deducted from the interest for the entire holding period.

At maturity, three paths are available. First: withdraw everything and close the account. The full corpus comes out tax-free in one go. Second: extend for five years without making any fresh deposits. The existing corpus keeps earning interest at the prevailing rate, and you withdraw as much as you want, once a year. Third: extend for five years with continued deposits of Rs.500 to Rs.1.5 lakh per year. In this mode you make one withdrawal per year, capped at 60% of the balance at the start of the 5-year extension. These extensions repeat indefinitely in 5-year blocks, making PPF a viable permanent tax-free compounding account for someone who does not need the money at 15 years.

Use all three rather than picking one. EPF runs automatically for salaried employees and offers 8.25% guaranteed with employer matching. It is not optional. PPF is the deliberate, voluntary component: open it yourself, max it at Rs.1.5 lakh per year, and let 15 years of compounding at 7.1% build a tax-free corpus alongside the mandatory EPF. NPS adds the exclusive Rs.50,000 deduction under Section 80CCD(1B) that neither EPF nor PPF offer. The combined approach for someone on the old tax regime: keep EPF contributions going, max PPF for the guaranteed tax-free return, put Rs.50,000 into NPS for the extra deduction, and invest anything beyond that in equity mutual funds. This covers all three bases without concentrating everything in one place.

Parents open a PPF account on behalf of a minor child, with the parent as the guardian. The account runs in the child's name and the minor's 15-year clock starts from the year of opening. Here is the limit that catches people: the combined annual deposit across the parent's own PPF and the child's PPF counts toward the parent's Rs.1.5 lakh Section 80C ceiling. You cannot double the deduction by splitting across two accounts in your household. However, if your spouse opens a separate PPF account independently, they claim their own Rs.1.5 lakh deduction. A family with two earning adults and a child's PPF invests up to Rs.4.5 lakh per year across three separate accounts, each earning tax-free returns and each claiming its own deductions.

PPF is available at all post offices and at authorised banks including SBI, ICICI, HDFC, Axis, and PNB. Most banks let you open a PPF account online if your savings account with them is already KYC-compliant. The documents needed: PAN card, Aadhaar, a passport-size photograph, address proof, and an initial deposit of at least Rs.500. You hold exactly one PPF account per person. If you already have a PPF account at one institution and try to open another, it is flagged as a duplicate and the second account earns no interest. The account transfers between post offices and banks free of charge through a transfer request form.

The PPF loan is the cheapest formal loan available in India. Available from year 3 through year 6 only. Maximum amount: 25% of the balance at the end of year 2. Interest: 1% per annum above the prevailing PPF rate, so at 7.1% PPF rate the loan costs 8.1%. Repayment must happen within 36 months. After the principal is repaid, you pay the remaining accrued interest. If you take a second loan before repaying the first, the interest rises to 6% above the PPF rate, making it considerably more expensive. Use the loan only when genuinely necessary. The compounding impact of the principal working in the account over 15 years far exceeds the 1% interest saving on a small loan.

PPF is not a fixed-rate product. The government announces the rate quarterly, and whatever is declared applies to the full account balance for that quarter. The current 7.1% has held since April 2020, the longest period without a change in at least 20 years. Before 2000, PPF rates ranged from 12% down to 8%. Between 2000 and 2020, they ranged from 7.9% to 8.7%. The 7.1% current rate is at the lower end of historical levels. The implication: if rates move up in future quarters, your existing corpus benefits too. If they fall further, the same applies in the other direction.

On the account holder's death, the 15-year lock-in is waived entirely. The nominee collects the full balance plus all accrued interest, tax-free, regardless of how long the account has been open. The process: the nominee submits the death certificate, a claim form, and the original passbook to the bank or post office. Settlement typically completes within 30 to 45 days. Keep your PPF nomination current. If the nomination is outdated, such as naming a parent who has since passed, the family has to go through a legal succession process that is considerably slower. Review the nomination at the same time you update your insurance nominations.