.png)
PPF Calculator
What is a Public Provident Fund (PPF)?
The Public Provident Fund (PPF) is a long-term investment scheme backed by the Government of India. It offers an attractive rate of interest and tax benefits, making it a popular choice for retirement planning and achieving long-term financial goals.
Key Features of PPF
PPF comes with several unique features:
- Tenure: The minimum investment duration is 15 years, which can be extended in blocks of 5 years.
- Contribution Limit: You can invest a minimum of ₹500 and a maximum of ₹1,50,000 in a financial year.
- Interest Rate: The interest rate is set by the government every quarter. Interest is compounded annually.
Tax Benefits of PPF
PPF enjoys an Exempt-Exempt-Exempt (EEE) status, making it one of the most tax-efficient investment options:
- Exempt (Contribution): Investments up to ₹1.5 lakh per year are eligible for tax deduction under Section 80C.
- Exempt (Interest): The interest earned on the PPF account is completely tax-free.
- Exempt (Maturity): The final maturity amount, including the principal and interest, is also tax-free.
PPF Investment Strategy
Maximize your PPF returns with these tips:
- Invest Early: Invest your annual amount before the 5th of April each year to maximize interest earnings for the financial year.
- Consistent Investment: Make regular yearly contributions to leverage the power of compounding over the long term.
- Partial Withdrawals: Partial withdrawals are allowed from the 7th financial year onwards, but it's advisable to avoid them to build a larger retirement corpus.
Understanding the PPF Calculation
PPF interest is compounded annually. The calculation is done year-on-year on the principal amount plus the accumulated interest. This calculator simulates this annual compounding process to project the final maturity value.