What is PPF?
Public Provident Fund (PPF) is a long-term savings scheme established by the Government of India under the PPF Act of 1968. It offers a sovereign-guaranteed return with complete tax exemption on the entire corpus under the EEE (Exempt-Exempt-Exempt) model. PPF is one of the most popular retirement-oriented investment options in India, especially for conservative investors seeking risk-free returns with tax benefits.
PPF accounts have a 15-year lock-in period, during which your money compounds annually at an interest rate set by the government. The account can be extended indefinitely in 5-year blocks after maturity. PPF is available at most post offices and major nationalised banks including SBI, HDFC, ICICI, and PNB.
How the PPF calculator works
This calculator uses the standard PPF compounding formula where contributions are made at the beginning of each financial year. The interest is compounded annually on the balance.
M = P × [((1 + r)^n − 1) / r] × (1 + r)
Where:
Total corpus at end of tenure
Amount invested each year
PPF interest rate set by Govt
Number of years invested
The calculation assumes contributions are made at the start of each year. In practice, PPF deposits can be made any time during the year, and interest is computed on the minimum balance between the 5th and last day of each month. The actual maturity may differ marginally from the displayed amount based on the timing of your deposits.
PPF vs Other Small Savings Schemes
PPF vs EPF
EPF is for salaried employees with mandatory employer contributions. PPF is voluntary and open to all individuals. PPF offers more flexibility in contribution amounts and frequency, while EPF typically offers slightly higher returns with the employer matching component.
PPF vs SSY (Sukanya Samriddhi Yojana)
SSY is for a girl child under 10 years with a higher interest rate than PPF (currently 8.2%). However, SSY has stricter withdrawal rules. PPF is suitable for general retirement savings while SSY is specifically for a daughter's education and marriage.
PPF vs FD
Bank FDs offer similar safety but interest is fully taxable as per your income slab. PPF offers tax-free interest and maturity, making it significantly more tax-efficient for investors in higher tax brackets. However, FDs have shorter lock-in periods and may offer higher rates depending on the bank.
PPF vs NPS
NPS offers market-linked returns with higher potential but carries market risk. PPF provides a sovereign guarantee with fixed returns. NPS requires 40% annuity purchase at retirement (taxable), while PPF has no such restriction. Many investors use both — PPF for the safe, tax-free core and NPS for equity exposure with additional 80C/80CCD benefits.