How Can I Calculate My PPF Account Interest?

Public Provident Fund ( PPF ), introduced in India in 1968 with the objective to mobilize small savings in the form of an investment, coupled with a return on it. It still remains a favourite savings avenue for many investors as the returns are tax free.It can also be called a savings-cum-tax savings investment vehicle that enables one to build a retirement corpus while saving on annual taxes. Therefore, anyone looking for a safe investment option to save taxes and earn guaranteed returns should open a PPF account.

Handling calculations may not be a piece of cake to all of us. If you are someone who is planning to invest in PPF and not sure how much to invest or how much returns you may get on investing a certain amount, our PPF calculator is here for you. Once you decide the amount you can afford to invest on a regular basis, the calculator considers the tenure to be 15 years and the prevalent interest rate to calculate the returns.

How to Use the PPF Calculator?

Our PPF calculator has a self-explanatory and user-friendly interface. However, if you are new to using online calculators, here’s a simple step-by-step procedure to make use of this free calculator:

Step 1: Under the ‘Frequency of Investment’ field, you will find a drop-down menu. Click on the drop-down menu to find the options, such as monthly, quarterly, half-yearly, and yearly. Based on how often you can make deposits into the PPF account within a financial year, choose an option from the drop-down menu.

Step 2: Under the label ‘Yearly Deposit Amount’, enter the amount you are planning to deposit in your PPF account over a financial year. Note that the maximum amount you can deposit in the PPF account is Rs.1.5 lakh per financial year.

Step 3: The current interest rate is provided by default for your information.

Step 4: Click on the blue circle and drag the pointer to the right based on the number of years you wish to stay invested in the PPF account. The default choice here is 15 years as this is the minimum period of investment. At the right end of the slide, you can see the numeric value of your selection.

Step 5: Our calculator automatically calculates the maturity value from the PPF account you can expect based on the values you have provided and the interest rate applicable on the present day.

How the PPF Calculator Can Help You?

Using a PPF calculator to estimate the returns can be a big help when you are planning your investments because:

• The calculator resolves your many questions on how the account works.
• You can have a clear picture of how much returns you can expect on investing a certain amount.
• You can use the calculator over and over again until you strike a balance between how much you must invest to get the desired returns.
• Since this is automated, manual calculations can be skipped and errors can be avoided.
• You can make use of the calculator at the tax-planning stage so you can plan your investments better.
• Since there is an option to extend the PPF account over and above the lock-in period, you may get an idea of how much time you have for retirement and how much wealth you can grow until then.

How is PPF interest calculated?

The interest on PPF is compounded annually. The formula for this is: F = P[({(1+i)^n}-1)/i]

Here, 

F = Maturity proceeds of the PPF 

P = Annual installments 

n = Number of years 

i = Rate of interest/100

For example, if you make annual payments of Rs.1,00,000 towards your PPF investment for 15 years at 7.1%, your maturity proceeds at the end of 15 years would be Rs. 31,17,276 .

Conclusion

Section 80-C provides PPF with EEE benefit (Exempt, Exempt, Exempt). This means that an investment up to Rs. 1.5 lakhs annually, the returns you earn and the corpus when the fund matures are all exempted from taxation. Now what can compare to this? Your answer is ELSS. Though ELSS has the lowest lock-in period, you can opt for this as a long-term investment (< 5 years). The longer you invest, the more tax you will save, not to mention earn inflation-beating returns.

Also read: 

Understanding PPF And Its Benefits

Are Mutual Funds A Good Choice Of Investment?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.