Table of Contents
- PPF Calculator
- PPF Calculator Limitations
- PPF Calculator Benefits
- PPF Calculator Types
- PPF Calculator in Excel
- How PPF interest is Calculated?
PPF Calculator or Public Provident Fund Calculator is an online tool which helps to calculate the total maturity amount. It will also calculate if you extend the PPF maturity.
Do you have PPF account with HDFC, SBI (State Bank of India), ICICI, POST OFFICE, PNB, AXIS BANK? you can easily calculate the maturity amount.
New Interest rates on public provident fund (PPF) scheme have been changed to 7.1 percent. Government reduced 80 basis point reduction which means .8% reduction of interest rate in PPF effective from 1st April 2020. Current PPF interest rate for the second quarter of the current financial year 2021-22 is 7.1% per annum.
Use the PPF maturity calculator below to find out the final accumulated value.
PPF Calculator Limitations
- PPF Calculator is assuming that your PPF is opened on 1st of the financial year.
- You are making PPF deposits before 5th of every month or every quarter or half-yearly or yearly. Hence PPF Calculator is taking deposit date beginning of every month.
- We have to assume interest rate same till maturity. You can take the average interest rate in PPF calculator.
- Investment is done beginning of the month, quarter, half-yearly or yearly.
PPF Calculator Benefits
- It saves time to calculate manually and gives different calculations as per your requirement.
- PPF calculator is very easy to use. Anyone can use it without any difficulty.
- Our PPF calculator provides accurate maturity amount. You can also check other websites PPF Calculator and compare maturity amounts with our PPF calculator.
- We are using the correct formula in our PPF Calculator so that you have accurate maturity amount.
PPF Calculator Types
There are different types of PPF Calculator available to calculator the maturity amount. Our PPF Calculator takes a fixed amount every month, every quarter, half-yearly and yearly.
If you put deposits in your PPF account irregularly, you need to have variable PPF calculator.
PPF Calculator in Excel
Microsoft Excel or Google sheets can also be used for PPF calculation and you can do a lot of customization in excel based PPF calculator. If you want to download excel based PPF calculator, click here
A PPF account is the best way to do asset allocation towards risk-free instruments. You get tax free amount when you are eligible to withdraw from your PPF account.
Public Provident Fund is a small tax savings scheme introduced by the National Saving Institute of the Ministry of Finance which is under the Government of India.
How PPF interest is Calculated?
PPF interest is calculated on the minimum balance between 5th and last date of the month. PPF interest is credited at the end of the financial year and If you deposit PPF amount, its interest is calculated in Simple Interest.
PPF calculator can be used to calculate maturity amount if you have PPF account in any nationalised banks (State Bank of India – SBI, PNB, BOB) private sector banks (ICICI, HDFC, AXIS) and post office.
You get a maximum deduction of rupees 1.5 lakhs under section 80 C in a financial year.
PUBLIC PROVIDENT FUND PPF CALCULATOR
Now how about a product that says, “the principal is also returned to you on maturity”.
That sounds better than the above proposition right. Such a product is the humble “Public Provident Fund”. (It does not offer any life cover). A PPF account as it is called is one of the best ways to do the asset allocation towards fixed income instruments.
Let us talk about this wonderful product.
Tax-Free Return in PPF
With the recent change, the current 7.1% p.a. tax-free return. An added advantage where contributions are made by an investor to his minor child’s account would be that of the interest income credited in child’s PPF Account being tax-free, will not attract any clubbing provisions of Section 64 of the Income Tax Act. It is EEE (exempt, exempt, exempt) as of now, but with the proposed direct code it is subject to change. It might become EET.
Flexibility of the PPF Account
Although the maturity period of investment in PPF is 15 years from the opening of the account, technically it is 16 years (explanation later). The minimum annual investment required is only Rs.500 p.a., giving the investor freedom to invest as per his choice and available resources.
The maximum annual limit of investment is Rs.1,50,000 p.a. The other attractive feature of PPF is that even after 15 years, the account can be renewed for a fresh term every five years. This facility of extending the five years block period from 15 to 20 to 25 to 30 years and so on can be availed continuously as per the choice of the investor.
The privilege of one annual withdrawal from PPF after the initial 6-year period and even during the extended block period after 15 years as available to the investor can come extremely handy.
Maturity Period of PPF Account
- The maturity period of the PPF account is 15 years.
- Explanation on How Technically PPF is for 16 years
Suppose the account was opened on 15th July 2019, now this means FY 19-20 The PPF rules ignore the year of opening the account. It claims to have a term of 15 years but the account matures after 16 years. The account holder can contribute to the account during the 16th financial year, even on the last day. So is the case for withdrawals and loans. So, technically, just add 15 to the financial year-end, that is, 2020 + 15 = 2035, which means the account matures at the end of 2034-35, on 1st April 2035. (We will talk about loans and withdrawals too).
For example, if someone opens the account on 1st of February 2020, then we say that, the financial year is 2019-20 and we add 15 to it, which means that the account will mature on 1st April 2035.
Total Safety in PPF
Enjoying the highest security in terms of investment, PPF is perhaps the only asset that is free from any civil claim or attachment, even by a Court of Law.
Various Forms Used in PPF Account
The following forms are used for various purposes:
- Form-A: Opening the Account.
- Form-B: Challan (Pay-in-Slip).
- Form-C: Partial Withdrawals.
- Form-D: Loans.
- Form-E: Nomination.
- Form-F: Cancellation and/or Replacement of Nomination.
- Form-G: Withdrawal by Nominees/Legal heirs where no nomination exists.
- Form-H: Post-mature Continuation Beyond 15 years or at end of every block of five years.
PRODUCT FEATURES OF PPF ACCOUNT
- PPF account can be opened in any branch of the State Bank of India or its subsidiaries or in any head post office or in any branches of nationalized banks. An account can also be transferred from one account office to another account’s office. A passbook is given to the account holder mentioning the details about the investments and the interest is entered in the passbook at the end of the financial year
- The PPF account can be opened by any individual, either on his own behalf or on behalf of a minor for whom he is the guardian or on behalf of a Hindu Undivided Family (until 12th May 2005) of which he is the member, by applying to the accounts office in Form “A” with an initial subscription of Rs.500.
- The minimum subscription in the PPF account per year should not be less than Rs.500 and it cannot exceed, Rs.1,50,000 in a financial year. A subscriber who fails to subscribe the minimum subscription of Rs.500 in any year, may approach the accounts office and set the account active by paying Rs.50 for each year of default, along with the arrear subscription of Rs.500 per each such year. Please note that withdrawals and loans are not available on such accounts; hence, from the point of view of investing, kindly invest at least the bare minimum amount of Rs.500 to keep the account non-dormant.
- The subscription may be paid into the account either in one lump sum or in instalments of maximum 12 in a year, whichever is applicable.
- The interest is now linked with the returns of the G Sec and will be revised every year in the month of April, though with this feature the product has an interest rate risk but still is a wonderful product. As of now, the interest is allowed at the rate of 7.1% p.a. for each calendar month on the lowest balance of the credit of an account from the close of the 5th day and the last day of the month and is credited to the account at the end of each year. Credit is made to the PPF account from the date of presentation of the cheque. Generally, the Post Office and Banks may have a difference of opinion here: if you have a PPF account in the Post Office, they may give you the credit on the date you deposit the cheque but banks might want to give credit to you after the cheque gets cleared and therefore the interest calculation would differ. So, you have to be prudent and have clear funds wherever you have your account before the 5th of every month so that such ambiguity is avoided and you earn your interest accordingly.
How is Interest Calculated in the PPF Account?
Suppose you open the account on 1st of April 2019 (the rate being 7.9% p.a. and the limit being Rs.1,50,000) and you deposit Rs.50,000 on 1st of April 2019, Rs.50,000 on 3rd August 2019 and Rs.50,000 as on 15th November 2019. How is the account balance and the interest calculated?
Kindly note that, in the PPF account, the interest is calculated only on the last day of the financial year. That is, if we update the PPF passbooks during the year, it will merely reflect the entry of the amount deposited and not that of the interest, the interest entry will only be made on the last day of the financial year or after that. Now considering the above example how is the interest calculated.
The deposit of Rs.50,000 will earn the interest for the entire year.
The deposit of Rs.50,000 will earn interest from August to March, that is for eight months. The deposit of Rs.50,000 will earn interest from December to March, that is four months. (Kindly note that this deposit was made on the 15th of November, that is after 5th of the month, hence it will not qualify for earning the interest for that particular month.)
So, the interest
will be (simple interest calculated as P × T × R/100)
Rs.50,000 × 7.9 % × 12/12 = Rs.3,950
Rs.50,000 × 7.9 % × 8/12 = Rs2,633
Rs.50,000 × 7.9 % × 4/12 = Rs.1317
So, the balance
in the PPF account as on 1st April 2013 will be (Principal + Interest),
that is, Rs.50,000 + Rs.50,000 + Rs.50,000 + Rs.3,950 + Rs.2,633 + Rs.1317 = Rs.1,57,900.00
That is, Rs. 1,57,900.00.
Continuing with the same example above, let us assume that from April 2013, you decide to invest Rs.1,00,000 in April every year. What will be the balance that you will have on maturity?
Let us assume, we are on 1st April 2013 and have a balance as of now, of Rs.1,06,746.66 (this becomes our PV), and we continue to invest Rs.1,00,000 (this becomes our PMT) on the 1st of April every year (Type is 1) and the investments will happen from April 2013 to April 2027 (as the account will mature on April 2028, 12-13 add 15 to it) which means that there will be 15 instalments (so NPER will be 15).
Using the above we can calculate FV (Future Value) as = FV (8.8%, 15, −Rs.10,000, −Rs.1,06,746.66, 1) = Rs.35,22,958.58
Let your child/you become a “Millionaire”.
As mentioned earlier you can invest Rs.1,00,000 (maximum limit) in the PPF account. Assume that you are in the top tax bracket (30%) and you want to invest in your minor child’s name or, simply put, if you want to calculate the maturity amount of PPF using excel we know that RATE = 8.8% p.a. and PMT = −Rs.1,00,000, NPER = 16 years, TYPE = 1 (assumption that the investment is done in the beginning) and PV = 0 and FV = Rs.35,30,234.61.
(This is of course with the assumption that the interest rate remains at 8.8% always)
Essentially, it means that you save Rs.30,000 per year on the tax payment and also create wealth for yourself to the extent of Rs.35,00,000. Now imagine you do this for your minor child today, he/she will certainly have a good capital when they reach adulthood and will certainly thank you for being a prudent parent.
|Years||Opening balance (Rs.)||Amount invested (Rs.)||Interest @ 8.8% (Rs.)||Closing balance (Rs.)|
|1||0||₹ 100,000||₹ 8,800||₹ 108,800|
|2||₹ 108,800||₹ 100,000||₹ 18,374||₹ 227,174|
|3||₹ 227,174||₹ 100,000||₹ 28,791||₹ 355,966|
|4||₹ 355,966||₹ 100,000||₹ 40,125||₹ 496,091|
|5||₹ 496,091||₹ 100,000||₹ 52,456||₹ 648,547|
|6||₹ 648,547||₹ 100,000||₹ 65,872||₹ 814,419|
|7||₹ 814,419||₹ 100,000||₹ 80,469||₹ 994,888|
|8||₹ 994,888||₹ 100,000||₹ 96,350||₹ 1,191,238|
|9||₹ 1,191,238||₹ 100,000||₹ 113,629||₹ 1,404,867|
|10||₹ 1,404,867||₹ 100,000||₹ 132,428||₹ 1,637,295|
|11||₹ 1,637,295||₹ 100,000||₹ 152,882||₹ 1,890,177|
|12||₹ 1,890,177||₹ 100,000||₹ 175,136||₹ 2,165,313|
|13||₹ 2,165,313||₹ 100,000||₹ 199,348||₹ 2,464,660|
|14||₹ 2,464,660||₹ 100,000||₹ 225,690||₹ 2,790,350|
|15||₹ 2,790,350||₹ 100,000||₹ 254,351||₹ 3,144,701|
|16||₹ 3,144,701||₹ 100,000||₹ 285,534||₹ 3,530,235|
Withdrawals from PPF Account
The maturity period of the account is 15 years and no withdrawal are allowed during the first six years. If however, at any time after the expiry of six years from the end of the year in which the initial subscription was made, the subscriber, if so desires, can withdraw from the balance amount to his credit an amount not above 50% of the amount standing to his credit at the end of the 4th year immediately preceding the year of withdrawal or balance at the end of the preceding financial year, whichever is lower, less the amount of loan, if any, drawn by the subscriber and which remains to be repaid. It may be noted that only one withdrawal is allowed per year. Hence, withdrawal also has to be planned accordingly.
Now, the 1st step is to calculate when the first withdrawal can be made. If the account is opened on, say, 15th July 2000, it means FY 2000-01, add six years to the end of financial year, that is, 01+6 = 07. So, the first withdrawal can be made in FY 06-07.
Amount of withdrawal – the preceding four years will be 2007 – 4 = 2003 and the preceding year will be 2007 – 1 = 2006. The amount withdrawable in the 7th year, FY 06-07 will be 50% of the balance to the credit on 31st March 2003 or 31st March 2006 whichever is lower.
Subsequent PPF withdrawals also apply the same concept.
You would have met lot of people who will say that they will invest only for three years in case of ELSS (equity linked savings scheme) and then withdraw and then reinvest, this will just help to save on tax and not accumulate wealth. The beauty of withdrawal makes PPF a very interesting tool. As said, one can withdraw the amount in the 7th year and reinvest it back in the PPF account (above rationale) but we are assuming that you have another interesting avenue (s) to invest but please note that the withdrawals will only be allowed if the account is continuously subscribed to. (Assume that we are investing the funds now at the beginning of each year and the withdrawals are happening at the end so that the amount is ready for the investment the next year) and let us see how the withdrawal affects us now.
|Years||Opening Balance||Amount Invested||Interest @ 8.8%||Withdrawals||Closing Balance|
We can withdraw the amount in the 7th year on the 50% of the balance available in credit at the end of 4th financial year immediately preceding the year of withdrawal or the preceding year, whichever is less.
Here, if we want to affect the withdrawal in the 7th year itself, the balance is the year end 50% balance of Year two or Year six, whichever is less. Now the balance credit in the person’s PPF account is Rs.8,14,418 and 50% more than what we need, that is we only need Rs.1,00,000, so in effect we can withdraw money from the PPF and refinance it on its own, that is it can also be viewed as a product where you put in money for the first six years and then it becomes self-sustaining. But yes, the maturity amount will be reduced (I am assuming that you have another investment opportunity that is why you are not wanting to put funds in PPF after six years and not otherwise).
After the expiry of the maturity period of 15 years, the subscriber is at liberty to withdraw the entire balance to his credit or continue to subscribe for a further block period of five years and in this case the subscriber is allowed only one withdrawal every year subject to the condition that the total withdrawals during the extended five year block period shall not cross 60% of the balance of his credit at the beginning of the block period. The facility of extending the block period can be availed even for a further block of five years on expiry of 20 years, 25 years, 30 years, etc. from the end of the year in which the initial subscription was made. It is always better never to close the once opened PPF account as it will mean beginning all over again.
Planning Your PPF Withdrawal
If you are planning to withdraw any amount from your PPF account that is permitted after the expiry of six years from the end of the year in which the initial subscription was made, keep in mind the following important points: Unlike 12 subscriptions, only one withdrawal is permitted during each financial year and hence, before your withdrawal, be sure of the exact amount you need to draw, since having drawn once the amount in a financial year, you would not be eligible to withdraw till the start of the next year. If possible, plan your withdrawal between the 1st and 5th of the month so that you do not lose interest for one month on the amount of withdrawal.
Loans from PPF Account
At any time after two years from the end of the year in which the initial subscription was made, the subscriber is eligible to apply for a loan amount not above 25% of the amount that stood to his credit at the end of the second year immediately preceding the year in which the loan is applied for. Such a loan amount, under the PPF scheme, is to be repaid either in one lump sum or in monthly instalments up to a maximum period of 36 months. After the principal amount of the loan is fully repaid, the subscriber is also required to pay the interest on the loan amount taken that is to be paid in two equal monthly instalments at the rate of 2% p.a. (over the prevailing rate) calculated for the loan period.
Let us go back to the same example on investment done on the 15th July 2000, that is, FY 00-01.
First Loan –
Add 2 to the financial year end 01 + 2 = 2003 (FY 2002-03).
Loan is available 25% of the amount to the credit on 31st March 2001.
Once again let us assume that someone is investing Rs.10,000 in the PPF account every year end.
|Years||Opening Balance||Amount Invested||Interest||Balance at the end of year||Loan Available|
In the event of the subscriber not being able to repay the loan within 36 months period, the unpaid loan amount would attract a higher interest rate of 6% p.a. as against 1%.
Therefore, if the loan is completely repaid in time, the effective rate of interest payable for the loan would work out to only 10.8% (8.8% would have been earned by investor plus additional 2% payable), whereas if the loan is not repaid within the stipulated time, the effective interest will go up to 14.8% (8.8% + 6%).
The facility of nomination can be availed in respect of the PPF account. Nomination once made can be cancelled or varied, as the case may be.
However, cancellation of nomination or variation is required to be recorded in the accounts office and also updated in the passbook of the subscriber.
In the event of the death of the subscriber, the balance amount lying in the PPF account of the subscriber is to be paid to the nominee when necessary application is made.
As explained earlier, PPF account is free from Court attachment and this is one such asset that cannot be attached under any circumstances whatsoever.
Tax Benefits in PPF Account
Under Section 80C, the earlier requirement of the eligible investment to be made “out of taxpayer’s income chargeable to tax” has been done away with, which means one can even borrow and invest in the PPF account. Therefore, this gives a great opportunity to do the financial planning.
Imagine you are an investor and you are through with your PPF limit and you want your spouse to also invest in PPF, you can lend him/her the funds and let the investment happen. Since it is no longer necessary that your investment in PPF should come out of your taxable income, you should plan your PPF investment in the fiscal year, as early as you can and start reaping 7.1% tax-free returns rather than leaving funds idle Please deposit the funds in the PPF account before the 5th of every month to earn interest for the month.
Pradeep deposits Rs.1,00,000 in his PPF account through a local cheque dated the 5th April 2012. In this case, he will be entitled to get interest for the whole month of April that works out to Rs.733.33 at 7.9% interest p.a. If he is late by a day or uses an outstation cheque for deposit, he would stand to lose the interest of Rs.733.33 in this instant. As regards subscription in your PPF account, you are permitted to make the same either in one lump sum or in instalments not exceeding 12 in a year (it need not be on a monthly basis). The minimum amount required to be deposited annually is Rs.500 and not below, but suppose an investor wants to invest say Rs.500 over a period of one year, he/she can deposit (Rs.500/12), that is 42 per month but the total investments have to be Rs.500 in a year.
If you are unable to create investment portfolio for yourself, you can use our fee only financial planning services.