PPF Calculator: Returns, Rules, and Tax Benefits Explained

PPF Complete Guide: Features, Returns, Calculation, and Strategy for 2026

Public Provident Fund (PPF) is India's most popular government-backed savings scheme. With a sovereign guarantee, complete tax exemption (EEE status), and stable 7.1% annual returns, it is the foundation of conservative financial planning for millions of Indians.

Key PPF Features: Complete Reference

Feature

Details

|---|---|

Annual interest rate	7.1% (as of 2026, reviewed quarterly by government)
Minimum annual deposit	₹500
Maximum annual deposit	₹1,50,000 per financial year
Lock-in period	15 years (extendable in 5-year blocks)
Opening age	Any age — minors can have PPF opened by parents
Tax status	EEE — Exempt-Exempt-Exempt
Nomination	Yes — must be filed
Premature closure	Only in specific exceptional circumstances
Risk	Zero — backed by Government of India
DICGC insurance	Not applicable (Government guarantee is stronger)

Triple Tax Exemption (EEE) Explained

PPF is one of the few truly EEE (Triple Exempt) instruments:

• E1 — Tax deduction on investment: Contributions qualify under Section 80C up to ₹1.5 lakh. If you're in the 30% bracket, you save ₹46,800 in tax on maximum contribution.
• E2 — Tax-free interest: The 7.1% annual interest is completely tax-free. In contrast, FD interest is fully taxable at your slab rate.
• E3 — Tax-free maturity: The entire maturity amount — principal + all accumulated interest — is withdrawn tax-free.

Effective yield comparison for someone in the 30% tax bracket:

• PPF at 7.1%: Effective post-tax yield = 7.1% (all interest tax-free)
• Bank FD at 7.5%: Post-tax yield at 30% slab = 5.25%
• PPF effectively beats FD even with a lower nominal rate

How PPF Interest Is Calculated: The Critical Rule

PPF uses a unique calculation method: interest is calculated on the minimum balance between the 5th and last day of each month.

This creates a critical rule: Always deposit your PPF amount between April 1 and April 5 to earn interest for the entire month of April.

Example:

• Deposit ₹1.5 lakh on April 3: Earns interest from April onwards = full year
• Deposit ₹1.5 lakh on April 6: Misses April interest = loses ~₹888 (7.1% of ₹1.5L / 12 months)
• Deposit ₹1.5 lakh in March: Earns April interest on that amount = one extra month

The difference of a few days costs nearly ₹900 per year. Over 15 years at compounding, this is significant.

PPF Maturity Amount Calculation

Formula: M = P × [((1 + r)^n - 1) / r]

Where M = Maturity, P = Annual deposit, r = Annual interest rate / 100, n = Number of years

With ₹1.5 lakh annual deposit at 7.1% for 15 years:

Total invested: ₹22.5 lakh

Interest earned: ₹18.18 lakh

Maturity amount: ₹40.68 lakh

Annual SIP Amount

15-Year Maturity at 7.1%

Total Invested

Tax-Free Gain

|---|---|---|---|

₹500/month (₹6,000/yr)	₹1.62 lakh	₹90,000	₹72,000
₹5,000/month (₹60,000/yr)	₹16.27 lakh	₹9 lakh	₹7.27 lakh
₹10,000/month (₹1.2L/yr)	₹32.53 lakh	₹18 lakh	₹14.53 lakh
₹12,500/month (₹1.5L/yr)	₹40.68 lakh	₹22.5 lakh	₹18.18 lakh

Extension: Maximising PPF Beyond 15 Years

At maturity (after 15 years), you have three options:

Option 1: Close and withdraw — Receive full maturity amount tax-free

Option 2: Extend without contribution — Account continues earning 7.1% on accumulated balance with no further deposits. You can withdraw any amount once per year. Zero additional investment required.

Option 3: Extend with contribution (most powerful) — Continue depositing up to ₹1.5 lakh/year in 5-year extension blocks. Full EEE tax benefits continue.

The extension math: If your PPF reaches ₹40.68 lakh at maturity, extending with contribution for 5 more years can grow it to ₹68–72 lakh (including new deposits and compounding).

Partial Withdrawal Rules

• Available from: 7th financial year onwards (i.e., from FY 7, counting from the year of account opening)
• Maximum withdrawal: 50% of the balance at the end of the 4th year OR 50% of the balance at the end of the year preceding the withdrawal, whichever is lower
• Frequency: Once per financial year
• Tax: Completely tax-free

Loan Against PPF

You can take a loan against your PPF balance between the 3rd and 6th years:

• Maximum loan: 25% of balance at end of the 2nd year before loan application
• Interest rate: PPF interest rate + 1% = 8.1%
• Repayment: Within 36 months
• After 6th year, loans are replaced by partial withdrawal facility