How to use PPF Calculator?

To use the PPF calculator correctly, you need to provide the following data:
  • Deposit Frequency – This can be chosen as monthly, quarterly, half-yearly and annually. In case of quarterly deposits made every quarter, half-yearly deposits mean twice each year and so on.
  • Investment Amount – This is the amount that is to be deposited in the account as per the deposit frequency. Thus if the deposit amount is ₹ 10000 and Deposit Frequency is quarterly, total PPF deposit for the year will be ₹ 40,000 and automatically calculated by the PPF calculator.
  • Interest Rate – This is the PPF rate of return that you are expecting on your investment. The current interest rate is set to 7.1%
  • Investment Period of the PPF account – Minimum 15 years to max 30 years with an option of extension in blocks of 5 years.

Basic Rules

There are some key rules that you need to bear in mind too. Some key calculation of PPF rules are as follows:
  • The minimum you can invest in PPF account is ₹ 500 annually
  • The maximum amount you can invest in a year is ₹ 150000 annually.
  • Compounding of interest occurs once every year at the end of the financial year.
  • The maturity of PPF account is in 15 years and the proceeds are completely tax-free.
  • PPF rate is liable to change every quarter as per announcements made by the Finance Ministry.

Tax Benefit of PPF Investments

Investments in the Public Provident Fund are subject to tax deduction benefits up to the cumulative limit of ₹ 150000 u/s 80C of the Income Tax Act, 1961. Moreover, PPF investments are classified as an EEE (exempt, exempt, exempt) which means that the principal investment, the maturity amount and the interest earned are completely exempt from taxation.

Loan against PPF

The option of loan against PPF is available from the 3rd year calculated from the account opening date till the end of the 6th year of the PPF account. The amount that can be availed as a loan is linked to the total value of PPF deposits plus any accrued interest.

The amount that is availed as a loan against PPF as calculated by the PPF return calculator is equal to 25% of the PPF balance in the account for the year preceding the year of PPF loan application. For example, if you apply for a PPF account in March 2020, the qualifying amount will be calculated based on the closing balance in March 2019.

PPF Withdrawal Rules

The PPF account matures after completion of 15 years calculated from the day the account was opened. After maturity, the entire PPF account balance can be withdrawn. However, after the end of the 6th year, PPF subscribers are allowed to make partial withdrawals from their account. The qualifying amount for partial PPF withdrawal is automatically calculated by the PPF calculator and is the lesser of the following amounts:

  • Rule 1. 50% of the PPF account balance in the year preceding the year of a loan application or
  • Rule 2. 50% of the PPF account balance in the 4th financial year preceding the year of the loan application.