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What is PPF?

Public Provident Fund or PPF, is a saving as well as a tax saving scheme. It was introduced by the National Savings Institute in 1968 by the Ministry of Finance.

Objective of PPF

PPF scheme’s objective is to offer an attractive rate of interest. Hence, PPF also encourages people to save their money. This money is also not considered for tax payment. PPF thus, helps people save money with tax benefits.

PPF also offers an EEE scheme i.e., Exempt, Exempt and Exempt benefit. This helps triple the tax benefits in following ways:

  • Under Section 80C, Income tax benefit on invested amount (overall limit 1,50,000.00 INR).
  • 100% tax exempted interest on PPF.
  • Tax exempted on PPF maturity amount.

PPF Calculator for 20 Years

An online financial tool, PPF calculator helps to determine the interest rate earned on the PPF’s investment and the amount that you would receive after maturity of your PPF in 15 years. This calculator performs various calculations on your PPF account inputs that you provide in the system to determine the amount.

How to Calculate PPF Interest Rate

  • The interest by the PPF calculator is calculated every year considering the initial details provided by you. The type of deposit should be chosen by you at the time of opening your PPF account (fixed amount or variable amount) and accordingly, the amount should be deposited in the bank or rather your PPF account every year.
  • It is assumed that you are depositing money on the 1st of April every year. The interest is then calculated considering the market rate, for the entire financial year.
  • PPF interest calculator using the PPF formula also gives you an idea about the amount of investment, that you have made until a particular year.

Calculate PPF Interest Rate

Looking at the PPF interest rate history, usually the PPF interest rate is higher each year than offered by any other scheme. It was even at a high of 8.1% per annum (compounded annually). The best thing is that it is tax free. You can open a PPF account with any national bank including Punjab National Bank, State Bank of India or alike, or post office, or even private banks like ICICI, Axis Bank, HDFC, etc.

The minimum amount to deposit each year is INR 500/- and the maximum amount is INR 1,50,000/-. The duration of maturity is fifteen years.

Some Facts about PPF

PPF illustration explained below:

  • Interest rate: 7.6%
  • Minimum amount to deposit each year: 500/-
  • Maximum amount to deposit each year: 1.5 lakhs
  • Duration of deposit or Lock-in period: 15 years
  • Number of installments each year: 1(minimum) to 12(maximum)
  • Number of account one can open: One Only
  • PPF account can be extended for a period of 5 more years after the date of maturity that is after 15 years.
  • Tax saving benefit for 1.5 lakhs under section 80C each year.

Documents Required to Open PPF Account

Listed below are the documents which are usually required to open a PPF account:

  • Fully filled PPF account opening form
  • A copy of Driving License, PAN card, Voter’s ID, Aadhar Card along with the original document as a proof of identity.
  • Current address proof or proof of residence
  • 2-4 Passport size photographs

How to Deposit Money in Your PPF Account

There are two ways to deposit your money in your PPF account:

  • Online Deposit:

With the advancement in technology and everything in the world going digital, online cash deposit in your PPF account is an option made possible to the relief of many customers who are tech-savvy.

To deposit money in your PPF account online, you should know your online banking login details, along with your PPF account details. You can then easily transfer funds from your bank account to your PPF account. It is a great idea to link the two accounts, for easy funds transfer.

  • Offline Deposit:

In this case, you should visit your bank branch and provide them with your PPF account details. Once you do that, you can hand them your check with the amount to be deposited in your PPF account.

This type of deposit may take some time since it takes 2-3 days to clear a cheque. One should keep this in mind while choosing this option.

PPF Account Guidelines

Any Indian citizen can apply for a PPF account. An NRI is not allowed to open a PPF account.

All Indian Citizens can open a PPF account in the name of minors or in the individual’s name. Hindu undivided families are not allowed to open a PPF scheme in their names.

A PPF account holder can extend his/her PPF account for 5 years after a duration of 15 years. This can be extended for multiple times with 5 years block/ extension each time. One should always use PPF calculator for 20 years and using the PPF formula determine the amount he/she would receive after a duration of 15 years.