Public Provident Fund (PPF) is one of the most preferred investment options for risk-averse investors. This government-backed savings scheme was launched mainly to benefit small-scale investors. PPF provides guaranteed returns combined with tax benefits since it falls under the Exempt-Exempt-Exempt (EEE) category of income tax laws.
Those investing in PPF often want to know how much growth they can achieve during the investment tenure. However, the calculations for the same could be difficult. This is when a PPF calculator can come in handy. Using the PPF calculator, an investor can easily calculate the annual PPF returns from periodic contributions made to PPF account over a predetermined period.
The best part of a PPF calculator is that there is no need for separate bank-wise calculators since interest rates, maturity, withdrawal rules and taxation are decided by the government.
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How to use the Fisdom PPF calculator?
Fisdom’s PPF calculator is a simple compound interest variant. This easy-to-use PPF calculator requires investors to input the below listed data set
1. Yearly Deposit amount
You will have to fill in the yearly deposit amount here. Depending upon the frequency of your deposits, you can fill in the yearly PPF deposit amount. For Ex: If the deposit amount is Rs. 500 and the deposit frequency is monthly, total PPF deposit for the year will be Rs. 6,000.
Choose the duration for which you expect to be invested in PPF. You can choose any tenure between 1 to 30 years.
3. Rate of Interest
The current rate of interest as decided by the Government is prefilled for you.
After providing the above-mentioned data into the PPF calculator, it gives instant information regarding PPF maturity amount, PPF interest earned, total PPF investment and the net return percentage.
How can a PPF calculator help you?
Just like any investment tracker, a PPF calculator addresses investor concerns regarding the investment. The calculator keeps a track of the growth that can be achieved on the invested capital. Investors who already have a PPF account would know that interest rates may change every month.
It is now easier to keep a track of changing interest rates. With the help of a public provident fund calculator, account holders can easily find out monthly changes in interest rates.
Recommended read – How to open a PPF account?
Basic rules for PPF calculation:
There are some key rules that must be followed while calculating PPF returns:
- The maximum amount that can be invested annually is Rs. 1.5lakhs
- The minimum annual investment required in a PPF account is Rs. 500
- Interest compounding occurs once every year at the end of the financial year
- PPF account maturity is set for 15 years and the proceedsare entirely tax free
- Post the initial tenure of 15 years, it can be renewed in ablock of 5 years.
- PPF interest rate can change every quarter as per theFinance Ministry announcements.
PPF calculation for different tenures
Since PPF is compounded annually, the longer one remains invested in it, the higher the benefit to be availed. To understand the benefit of compounding with regards to PPF calculation, the following table shows an example of the principal invested, interest earned and maturity value to be received for 15, 20 and 30 year tenures.
|Investment Period||Yearly Investment||Total PPF Investment||Total Interest Earned||Maturity Value|
|15 years||Rs. 60,000||Rs. 9,00,000||Rs. 7,27,284||Rs. 16,27,284|
|20 years||Rs. 60,000||Rs. 12,00,000||Rs. 14,63,315||Rs. 26,63,315|
|30 years||Rs. 60,000||Rs. 18,00,000||Rs. 43,80,364||Rs. 61,80,364|
Assumptions in this PPF calculation are that the annualinvestment amount is Rs. 10,000 and the ongoing PPF interestrate is 7.1% per annum (since current PPF interest rate for Q1of FY 2021-22 is 7.1%).
Important factors related to PPF calculation
Here are some of the important aspects related to PPFcalculation that investors must be aware of:
- While calculating PPF returns, it is important to note the PPF account opening balance at the start of the year.
- Interest earnings are calculated on a monthly basis. The lowest balance between 5th to the last date of the month is taken for the interest calculation. So it is important to deposit your contributions before the 5th of every month to earn interest for that month.
- Investors can avail a loan on PPF after completion of the 3rd year till the end of the 6th year. The loan amount that can be availed is calculated from the date of account opening. The maximum loan amount is equal to 25% of the opening balance of the PPF account for the previous year and no loan must have been availed in the preceding year. After the end of the 6th year from the date of PPF account opening, an investor cannot take a loan against PPF.
- Partial withdrawals can be made after completing 6th year, i.e. the start of the 7th year. The maximum withdrawal amount must the lower of the following options:
- 50% of the previous year end’s account balancecalculated from the year in which withdrawal is made
- 50% of the 4th year end’s account balance thatprecedes the year in which withdrawal was made.
Benefits of using PPF calculator
The benefits of using an online PPF calculator arelisted below:
- It allows investors to get a clear idea of the interest thatcan be earned from a certain investment.
- Investors can also gauge the scope of tax saving through PPFfor a financial year.
- Investors who find it difficult to decide on the maturityperiod of their investment can use the PPF calculator fornear-accurate estimates.
- The calculator also provides an estimation of totalinvestment in a financial year.
PPF calculators can provide an insight on variousaspects of a PPF investment. This makes it easier for investorsto make calculated decisions for appropriate financial planningin the long term. It is important to enter accurate detailsabout your PPF investment to get back accurate results onexpected returns.
Yes. The investment in PPF up to Rs 1.5 lakh annually, the interest earned and the maturity amount are all tax-free.
The maturity period of PPF investment is 15 years and is calculated from the end of the financial year when the first investment is made. For example, if an investor makes the first investment in June 2021, then the first full year of investment would be April 2022 to March 2023 and the account would mature in March 2037.
If you miss your PPF contribution for a year, the account will become dormant. You can activate it by paying a minimum contribution of Rs. 500 and a penalty of Rs. 50 for each year that the contribution is missed.
Many banks allow PPF investments to be made online using the bank’swebsite or net banking services.
No. Only one PPF account is allowed per subscriber. However, you can opena PPF account in your minor child’s name.