PPF Calculator

The Public Provident Fund (PPF) has always been one of the best investment options available in the market to build savings through risk-free returns. You can also avail tax deduction of up to Rs 1.5 lakhs per annum under Section 80C of the Income Tax Act by investing in a PPF scheme.

If planning to select an investment plan and you are considering investing in PPF to grow your wealth, the first thing you will want to do is calculate your returns and compare them with other options. To determine the maturity value, consider using the PPF calculator. The online tool will help you determine your profits and tax savings.

Formula Used for Calculating PPF 

The working of a PPF calculator is based on the following mathematical formula to determine the maturity value at the end of tenure:

A = P [({(1+i) ^n}-1)/i]
i = Rate of interest
A = Maturity Amount
n = Investment Tenure in years
P = Annual Investment 

The maturity value of a Rs. 500 investment over a period of 15 years at an interest rate of 7.1% p.a. compounded annually is Rs. 13,561. Here is the calculation of the same depicted in a tabular format.

An Example of PPF Calculation
 

Let's understand the same with the help of an example. For instance, Ms Nandy made an annual investment of Rs. 75,000 for 15 years into a PPF. We will assume that the PPF offers interest at the rate of 7.1% p.a. Now, we can use the above formula to know the returns. 

Using the formula, it would look like this:

A = 75000 [({(1+7.1) ^15}-1)/7.1]
A = Rs. 20,34,105

Therefore, she would be receiving Rs. 20,34,105 as maturity value at an interest rate of 7.1% per annum. She can also track the amount of investment and the amount of interest earned separately. Here the investment amount (principal) is Rs. 11,25,000 and the interest earned is Rs. 9,09,105.

This calculation may seem to be too much of a hassle for most people. To simplify the complexity, a PPF account calculator can be used. Here is the calculation of Ms Nandy’s PPF investments shown in a table. 

How to Calculate Expected Returns from PPF? 

You can calculate your expected returns from PPF using the formula given below:

A = P [({(1+i) ^n}-1)/i]
Here,
A = Maturity value
I = Interest Rate
P = Annual Investment
N = Tenure

Let’s understand the expected return calculation with the help of an example. For instance, let’s consider the above example of Ms Nandy who has been investing Rs. 75,000/yearly in a PPF for 15 years at an interest rate of 7.1%. 

Therefore the maturity amount would be 

A = 75,000[({(1+7.1) ^15}-1)/7.1]
= Rs. 20,34,105

How to Use a PPF Calculator?

If you are new to online financial calculators, you can follow the steps to use a PPF calculator given below:

Step 1: Navigate to an online PPF calculator.

Step 2: Enter the annual investment and time period, usually in most PPF calculators users are not required to enter the interest rate as it is set by EPFO and remains the same across all Financial Institutions.

Step 3: Within a fraction of seconds the results will be displayed on your screen.

PPF Interest Rates FY 2023-24

The PPF interest rate for the current quarter remains unchanged. The rate of interest for the current quarter of 2023-24 is 7.10% p.a. as of November 2023. This rate is revised by the Ministry of Finance as and when required.

The interest on your investment is calculated every month on the lowest amount of balance between the fifth day and the last day of the month. The interest amount is credited annually at the end of the year. Hence, it is a good idea to start a PPF investment between the 5^th and the last day of the month to gain the maximum benefits from it.

Tax Benefits of PPF Investments

There are some lucrative tax benefits of investing in the Public Provident Fund. The entire amount of investment can be exempted under deductions under 80C of the Income Tax Act. However please note that the amount of investment must not exceed Rs 1.5 lakhs in a financial year. Your interest income earned is also exempted from any sort of taxation.

However, that’s not all the tax benefits of PPF. The entire maturity amount is exempt from taxes. Due to the triple tax benefits it offers, PPF carries the rate EEE (exempt-exempt-exempt) status. Even if you make partial withdrawals or close your account, you can avail these tax benefits.

Now, let us learn more about PPF to understand why it’s so popular. 

ARN - INT/ED/12/23/7144