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| May 24, 2023

PPF Interest Rate: How to Calculate Returns, PPF Calculator, Tax Benefits

Saving money is the first and one of the most crucial steps towards building a financially secure future. It not only makes you prepared for the most uncertain phases of life but also gives you peace of mind while reducing unnecessary financial burden. According to the rule of thumb, an individual should save 60% of his or her total earnings. By putting aside a sum of money in a systematic manner, you can easily get over any financial crunches. In today’s time, there are a number of saving options available in different forms. Most of these options not only aid in building long-term wealth but also help with tax savings. PPF is one such investment option that has gained huge popularity among tax-saving investors.

Here is a detailed guide about what a PPF account is, the benefits it offers, and how to calculate returns:

What is PPF?

The PPF, or Public Provident Fund, is among the most popular tax-saving and investment options in India. Introduced in 1968 by the Ministry of Finance, Government of India, it has been specifically designed to encourage savings among individuals. By using this scheme, an individual can easily save a significant amount of money over time and build a corpus of funds for his or her financial requirements. In addition to a decent ROI, it also offers several tax benefits, making it a preferable option. There are a number of banks that offer the facility of opening a PPF account. Other than this, you can also consider the PPF scheme available in the post office. You can choose either option at your convenience and get details about the PPF schemes they are offering.


Here are some of the reasons why you should consider investing in PPF: -

Long-term investment: PPF is a long-term investment option that comes with a lock-in period of 15 years. This means that the money you are going to put in the PPF account cannot be withdrawn before the completion of the lock-in period. As a result, it can help you build a substantial corpus that you can later use to meet a number of financial goals.

Regular contributions: The most important rule of saving is making regular investments. PPF is one of those options that encourage regular and disciplined saving. One can start investing in PPF with an amount as low as INR 500. And the maximum annual limit for PPF investment is INR 150,000.

Tax benefits: Under Section 80C of the IT Act, 1961, the PPF offers tax benefits. One can claim income tax deductions of up to Rs. 1.5 lakh on the amount invested in the scheme. In this, the EEE (exempt-exempt-exempt) model of taxation is followed, which means that the interest earned and the maturity amount are both tax-exempt.

Investment Security: Since this is a government-backed saving scheme, it comes with complete investment security. The interest earned on a PPF account is backed by a sovereign guarantee, which also makes it safer than bank interest. Given all these reasons, it is a suitable investment option even for people with a lower risk appetite.

Reliable Pension Tool: Given the amount of security and assurance it comes with, PPF can be treated as a good pension plan. One can choose not to withdraw the amount when the lock-in period ends. This way, he or she will be able to invest more and get better returns when they need them.

Interest Rate

Generally, the rate of interest for PPF accounts is always higher as compared to other popular saving options such as fixed deposits, etc. However, the PPF interest rate is revised by the Central Government every quarter (the average rate being 7-8%). It can decrease or increase depending on the overall economic scenario.

The current interest rate for Q1 (April–June) FY 2023–24 for PPF accounts has been fixed at 7.1%, compounded annually. To check the current rate, one can also use an online PPF interest rate calculator. There are a number of PPF interest calculators available that can also give you an approximate idea of the total amount you will get at maturity.


The Public Provident Fund is a long-term investment scheme that has a lock-in period. No matter whether you are considering a bank or investing in the post office PPF scheme, the 15-years lock-in period will always be there. However, there is a facility for partial PPF withdrawals. This means one can withdraw a certain part of the invested amount after 5 years. Other than this, an individual is allowed to take a loan against his or her PPF account at an agreeable interest rate. The loan benefit can be availed from the 3rd to the 6th year of account opening. This feature is beneficial for investors who are looking for a short-term loan without having to pledge any collateral.

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