Public Provident Fund (PPF) Calculator

The Public Provident Fund is a statutory small-savings scheme in which the balance compounds once a year rather than monthly, which is why the maturity projection uses the future value of an ordinary annuity: each annual deposit P is compounded for the remaining years, and the sum of that geometric series collapses to P multiplied by ((1+r)^n - 1) divided by r. Any opening balance is compounded separately as a single lump sum. Deposits are capped between 500 and 150000 rupees per financial year, interest is credited on 31 March, and the monthly interest base is the lowest balance standing between the 5th and the last day of each month. That rule has a practical consequence the formula hides: a full-year contribution paid before 5 April earns roughly a year of interest, while the same amount paid on 31 March earns almost none. The declared rate has been 7.1 percent since April 2020, down from double-digit levels in the late 1980s, and it is reset every quarter, so a 15-year projection at one fixed rate is a scenario rather than a forecast. The lock-in runs 15 years from the end of the financial year in which the account is opened, and can then be extended in blocks of 5 years with or without fresh contributions. Loans are available between the third and sixth years, and partial withdrawals from the seventh year, limited to 50 percent of the balance four years earlier. The Section 80C deduction shown here is capped at 150000 rupees and is shared with all other 80C instruments, including a minor child account held by the same guardian.

The scheme was created by the Public Provident Fund Act, 1968, and came into force on 1 July 1968 under the National Savings Organisation of the Ministry of Finance. Its purpose was to extend a retirement savings vehicle to people the Employees Provident Fund of 1952 did not reach: the self-employed, professionals, and workers outside registered establishments who had no employer-backed provident fund. Accounts were sold through post offices and, later, branches of nationalised banks, which is why the scheme spread far beyond the salaried middle class it was originally modelled on. For decades the rate was set administratively and stayed unchanged for long stretches, peaking around 12 percent in the late 1980s before drifting down through the 1990s and 2000s. A committee chaired by Shyamala Gopinath reported in 2011 recommending that small-savings rates be linked to yields on government securities of comparable maturity plus a modest spread; quarterly resets on that basis became routine from April 2016. The annual deposit ceiling followed a similar path, rising from 70000 rupees to 1 lakh in 2011 and to 1.5 lakh in the 2014 budget, aligning it with the Section 80C limit. The April 2020 cut to 7.1 percent took the rate to its lowest level in the scheme history.