How Does the PPF Calculator Work?
The Public Provident Fund (PPF) is an Indian government-backed savings scheme with an Exempt-Exempt-Exempt (EEE) tax status. The interest rate is set quarterly by the Ministry of Finance (currently 7.1% p.a.). The minimum deposit is ₹500 and maximum is ₹1,50,000 per financial year.
Deposits made between the 1st and 5th of any calendar month earn interest for that entire month, compounded annually on March 31st.
Formula & Mathematical Methodology
PPF employs annual compounding on opening monthly balances:
F = P × [((1 + i)n - 1) / i] × (1 + i)
Where F is the maturity amount, P is the annual deposit, i is the annual interest rate, and n is the number of financial years (minimum 15 years).
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Step-by-Step Practical Calculation Example
If you deposit ₹1,50,000 annually on April 1st for 15 years at 7.1% interest:
- Total Capital Invested: ₹22,50,000
- Total Tax-Free Interest: ₹18,18,209
- Final Maturity Corpus: ₹40,68,209