PPF Calculator

How PPF Interest Actually Accrues

PPF interest is calculated on the lowest balance in your account between the 5th and the last day of each month, but it's credited to your account only once a year, at the end of the financial year. The calculator above applies a simplified monthly-compounding estimate to make the projection easy to follow — the real figure depends on exactly which date each month you contribute, since depositing before the 5th of the month earns interest for that month while depositing after doesn't.

The practical takeaway: contribute before the 5th of the month (ideally as a lump sum early in the financial year, if you can) to maximize the interest actually credited, rather than spreading contributions late in each month.

Worked Example

A ₹10,000 monthly contribution for the full 15-year lock-in at 7.1% p.a.:

Over the 15-year lock-in, interest earned is comparable to the amount actually contributed — PPF's tax-free compounding over a long, uninterrupted horizon is where most of the benefit comes from.

The EEE Tax Status

PPF is one of the few investments with full EEE (Exempt-Exempt-Exempt) tax treatment: your contribution is deductible under the combined 80C limit (subject to the overall ₹1.5 lakh ceiling shared with other 80C instruments), the interest that accrues each year is entirely tax-free, and the maturity amount is tax-free on withdrawal too. This benefit is available only under the old tax regime, since the new regime doesn't allow 80C-style deductions.

Lock-in, Extension, and Partial Withdrawal

PPF has a 15-year lock-in from the date of account opening. At maturity, you can withdraw the full amount, or extend the account in blocks of 5 years — either continuing to contribute or leaving it to keep earning interest without further deposits. Partial withdrawals are permitted from the 7th financial year onward, subject to a cap based on your balance, and loans against your PPF balance are available in certain earlier years, each with its own conditions.

PPF vs Other 80C Options

PPF is one of several instruments eligible for the combined 80C deduction, and each comes with a different trade-off between lock-in, taxation, and risk. ELSS (Equity Linked Savings Scheme) mutual funds carry the shortest lock-in among 80C options — 3 years — but your money is invested in equity markets, so returns fluctuate and gains above the exemption threshold are taxed as long-term capital gains on redemption. A 5-year tax-saver bank FD sits in between: a fixed lock-in of 5 years, a fixed rate set by the bank at the time of booking, and interest that is fully taxable at your slab rate every year it accrues. PPF, by contrast, is fixed-rate and government-backed, with a 15-year lock-in that is longer than either alternative, but its EEE tax treatment means none of the contribution, interest, or maturity proceeds are taxed.

None of this makes one instrument objectively better than another — a shorter lock-in with market-linked upside suits a different goal and risk appetite than a long, fixed-rate, tax-free instrument like PPF. Many investors use a mix, rather than putting the entire ₹1.5 lakh 80C limit into a single scheme.

Who Should Consider Opening a PPF Account

PPF is available to any resident Indian individual, which makes it particularly relevant for the self-employed, freelancers, and business owners who don't have access to EPF (Employees' Provident Fund) through an employer. For someone without a workplace retirement scheme, PPF functions as a long-horizon, fixed-rate, government-backed savings vehicle that builds a retirement-style corpus over its 15-year (and extendable) life, without exposure to market swings.

It's worth remembering that the 80C deduction on your PPF contribution is only available if you file under the old tax regime — the new regime does not allow 80C-style deductions at all, so if you've opted for (or default into) the new regime, PPF still works as a fixed-rate, tax-free-on-maturity savings option, but you won't get the upfront deduction benefit on the amount you contribute.

Opening a PPF Account for a Minor or Through an HUF

A parent or legal guardian can open a PPF account on behalf of a minor child, with the guardian operating the account until the child reaches the age of majority. This is a common way for parents to start a long-horizon, tax-free savings pool for a child well before adulthood, alongside their own PPF account.

One point worth flagging rather than glossing over: contributions to a minor's PPF account interact with the combined 80C deduction limit and the overall per-individual contribution ceiling in ways that depend on your specific circumstances, and the rules here have been tightened over the years around accounts opened in the name of the same minor by both parents. If you're planning to open or already hold a PPF account for a minor alongside your own, it's worth checking the current rules — or asking us — before assuming a specific combined limit applies to your situation.

What Happens to a PPF Account on the Death of the Account Holder

PPF accounts allow you to register a nomination at the time of opening (or add one later), naming who should receive the balance if you pass away before maturity. On the death of the account holder, the accumulated balance is paid out to the nominee or, in the absence of a valid nomination, to the legal heir — generally without the account being forced to continue for the remainder of the original 15-year lock-in. The exact documentation and process can vary depending on the bank or post office where the account is held, so nominees or legal heirs should check with that specific branch on the paperwork required, rather than assuming a single uniform process applies everywhere.

PPF Loans: Borrowing Against Your Own Balance

Between the 3rd and 6th financial year of a PPF account, you can take a loan against your balance rather than a withdrawal, which is a separate facility from the partial withdrawal option available from the 7th year onward. The loan amount is capped as a percentage of the balance at the end of the second year immediately preceding the year in which you apply, and it carries its own interest rate (set with reference to the PPF rate itself, but distinct from it) and repayment schedule.

This facility is most useful for a short-term cash need in the early years of the account, before partial withdrawals become available — since taking a PPF loan keeps your account balance (and the corpus that keeps compounding) largely intact, unlike a withdrawal which permanently reduces the balance. Because the exact percentage cap and interest rate are set by scheme rules that can be revised, confirm the current terms with your bank or post office before relying on a specific figure.

Once the account crosses the 6-year mark, this loan facility is no longer available — from the 7th financial year onward, the partial withdrawal option described earlier takes over as the primary way to access funds from a running PPF account without closing it. Between these two facilities, most account holders have some form of access to their balance for the majority of the 15-year lock-in, without needing to close the account entirely — a meaningful practical advantage over a product with no access at all during its lock-in period.