Calculate Public Provident Fund maturity amount
Public Provident Fund is a government backed long term savings scheme that has been around since 1968. It remains one of the most popular investment options in India, and for good reason โ it offers tax benefits at three stages, which is extremely rare. The interest earned is tax free, the amount invested qualifies for Section 80C deduction, and the maturity amount is completely tax free. In tax terminology, this is called EEE โ Exempt, Exempt, Exempt.
The PPF account has a 15 year lock-in period, which sounds long but is actually great for retirement or long term wealth building. The current interest rate is 7.1% per annum, compounded annually. This rate is set by the government and revised quarterly โ though it hasnt changed much in recent years.
If you invest โน1.5 lakh per year (maximum allowed) for 15 years at 7.1%:
Maturity amount โ โน40.68 lakh. Total invested = โน22.5 lakh. Tax free gain = โน18.18 lakh.
And remember โ this entire โน40.68 lakh is in your hands with zero tax. No LTCG, no income tax. Nothing.
Deposit limits: Minimum โน500 per year, maximum โน1.5 lakh per year. Can be deposited in one go or in installments (maximum 12 installments per year).
Best time to deposit: Deposit before the 5th of each month to earn interest for that month. Interest is calculated on the lowest balance between 5th and end of month. Many people lose one month of interest simply because they deposit on the 7th or 10th. For annual lumpsum, deposit before April 5th to maximize the year.
Extension after 15 years: You can extend in blocks of 5 years, either with or without further deposits. This is great โ your corpus keeps compounding tax free.
Loan against PPF: Available from 3rd to 6th year. Up to 25% of balance at end of 2nd preceding year. Interest on loan is 1% above PPF rate.
Partial withdrawal: Allowed from 7th year onwards. Up to 50% of balance at end of 4th year or immediate preceding year, whichever is lower.
All three qualify for 80C deduction. But returns and liquidity differ significantly.
PPF gives guaranteed ~7.1%, fully tax free, but 15 year lock-in. Very safe, zero risk.
ELSS (Equity Linked Savings Scheme) has only 3 year lock-in, historically given 12โ15% returns, but gains above โน1 lakh are taxed at 10%. Better returns but market risk.
NPS (National Pension System) gives tax deduction up to โน2 lakh (โน1.5L under 80C + โน50K under 80CCD), but 60% corpus is tax free at retirement, 40% must be used to buy annuity which is taxable. Best for pure retirement planning.