PPF Calculator – How to Calculate PPF Interest Rates on Investment?

PPF Calculator – How to Calculate PPF Interest Rates on Investment?


You can use a PPF calculator for calculating the returns on your investment, by entering several specific pointers. Here is a guide to the same for your benefit. 


Stuck using the iob PPF calculator or any other online PPF calculator? The procedure is simple and you have to only input some details to get the returns on your investment. The Public Provident Fund (PPF) has been around as an investment option for Indians since 1968, with an objective of offering secure and decent returns to investors, in tandem with tax savings. This helps in the development of a future corpus for retirement. The present rate of interest stands at 7.1% on PPF investments and there are negligible risks to these investments, since they are backed by the Government of India at all times. 

The invested amount, interest earned, and the maturity amount are all exempted from taxes. You can easily open your PPF account by submitting an application with your KYC documents and proof of your signature. You may open this account with any public-sector bank or the Post Office. Some private sector banking entities also have authorization to help customers open their PPF accounts. The amount you invest will stay locked for a period of 15 years. There are partial withdrawal options (once every year) from the beginning of the 7th year. You can extend your PPF tenure in 5-year blocks. The minimum investment amount is Rs. 500, while the maximum amount is Rs. 1,50,000 under this plan. 

You may either make a lump sum deposit or pay in 12 installments. It is mandatory to invest at least once in the PPF account each year. The maximum annual investment amount is Rs. 1,50,000. You are eligible for tax deductions up to Rs. 1,50,000 under Section 80C. The PPF interest is worked out on the lowest balance in the account between the 5th and last day of every month. If you have to invest, put in your money before the 5th of each month in order to get interest on the same for that particular month. 

Calculator and Calculation Formula

PPF returns may be calculated online without any hassles. The calculation formula is given below for your perusal: 

The formula is the following- M = P [ ( { (1 + t) ^ n } – 1 ) / i ] x ( 1 + i ). 


Here, P stands for the annual payment, M stands for the Maturity Value, n stands for the  number of years, and i stands for the rate of interest. The portion after P is the annuity factor. This is multiplied with the contribution made annually, for ensuring the maturity value of the investment. 


For example, suppose you invest Rs. 1 lakh every year at a rate of interest that is 7.1%. The tenure is 15 years as well. This means that your calculation will be the following- 


M = 1,00,000 [ ( { (1 + 7%) ^ 15 } – 1 ) / 7% ] x ( 1 + 0.07 )


This works out to Rs. 27,12,139 as the final figure. 

You will have to keep changing the interest rate, with changes in the same, as fixed by the Government on a quarterly basis. You should however calculate the same across suitable periods. For example, if the rate of interest was 8% for the first five years and 7.1% for the next five years, then you should first calculate the maturity values individually and add them subsequently. You can also choose monthly contributions as inputs for your online PPF calculator. However, the final result or maturity value will be the same in any case. Using the online calculator will help you simplify the entire process. 

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