What is PPF?
The Public Provident Fund (PPF) is a long-term savings scheme backed by the Government of India. You can open an account at a post office or most banks, deposit up to ₹1.5 lakh a year, and earn interest at a rate the government sets every quarter.
PPF is popular because it’s very safe, the interest is tax-free, and the 15-year lock-in encourages long-term saving.
How to use this PPF calculator
- Deposit every year: between ₹500 and ₹1,50,000.
- Interest rate: the current PPF rate. The default is 7.1%.
- Time period: 15 years, or longer if you plan to extend in blocks of five.
The calculator assumes you deposit at the start of each financial year (before 5 April) and that the rate stays the same throughout. Interest is compounded once a year.
The PPF formula
F = P × [((1 + i)ⁿ − 1) ÷ i] × (1 + i)
- P is the yearly deposit
- i is the yearly interest rate (7.1% = 0.071)
- n is the number of years
A worked example
Deposit the maximum ₹1,50,000 every year for 15 years at 7.1%:
| Item | Amount |
|---|---|
| Total deposited | ₹22,50,000 |
| Interest earned | ₹18,18,209 |
| Maturity value | ₹40,68,209 |
All of it is tax-free at maturity, under current rules.
PPF: the good and the trade-offs
Why people like it
- Government-backed, so the risk is very low.
- Interest and maturity are tax-free.
- Deposits get an 80C deduction under the old tax regime.
What to weigh up
- A 15-year lock-in, with only limited withdrawals before that.
- A ₹1.5 lakh yearly cap.
- The rate can change every quarter, and has been lower than long-run equity returns.
PPF alongside mutual funds
Many people use PPF as the steady, safe part of their long-term savings, alongside equity mutual funds for growth. Together they can balance safety and growth. See what a monthly investment in mutual funds could build with the SIP calculator, or compare with a bank deposit in the FD calculator.
