PPF Calculator

Why PPF is India's Favorite Investment

The Public Provident Fund (PPF) is a government-backed savings scheme launched in 1968. It was designed to mobilize small savings while offering a secure investment avenue with tax benefits.

Unlike Mutual Funds or Stocks, PPF returns are guaranteed by the Government of India. This makes it the safest investment product in the country, safer even than Bank FDs.

The "EEE" Tax Advantage

PPF is one of the few instruments that enjoy the "Exempt-Exempt-Exempt" status:

• Exempt on Investment: The money you deposit (up to ₹1.5L) is deductible under Section 80C.
• Exempt on Interest: The interest earned every year is NOT added to your taxable income.
• Exempt on Maturity: The final amount you withdraw after 15 years is 100% tax-free.

Interest Calculation: The "5th of the Month" Rule

Many investors lose money because they don't know this rule.
The Rule: Interest is calculated on the lowest balance in your account between the 5th and the last day of the month.

Liquidity: Loans and Partial Withdrawals

While PPF has a 15-year lock-in, it is not completely illiquid.

1. Loan Against PPF

Available from the 3rd financial year up to the 6th financial year.
Interest Rate: You pay only 1% interest per annum. This is likely the cheapest loan you will ever get.

2. Partial Withdrawals

Allowed from the 7th financial year onwards. You can withdraw up to 50% of the balance at the end of the 4th preceding year or the immediate preceding year, whichever is lower.

What Happens After 15 Years?

When your account matures, you have three options:

1. Close the Account: Withdraw the entire corpus tax-free.
2. Extend Without Contribution: Keep the money in the account. It continues earning interest, and you can withdraw any amount anytime.
3. Extend With Contribution: You can extend the account in blocks of 5 years. You must submit Form H within one year of maturity to choose this option.

PPF vs. ELSS vs. FD