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SBI PPF Calculator
Public Provident Fund Returns Calculator
PPF Investment Details
Calculate maturity value of your PPF investment. Current interest rate: 7.1% p.a. (compounded annually).
Maturity Details
Investment Breakdown
Year-wise Breakdown
| Year | Deposit | Interest | Balance |
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PPF Benefits:
• Tax-free returns under Section 80C
• Government-backed safe investment
• Partial withdrawals allowed after 7 years
• Loan facility available from 3rd to 6th year
SBI Public Provident Fund (PPF) Calculator – India's Best Tax-Free Savings Scheme (EEE Status!)
The SBI PPF (Public Provident Fund) Calculator is a specialized tool to calculate maturity corpus, interest earnings, and year-wise accumulation for India's most popular long-term, tax-exempt savings instrument. PPF is a government-backed scheme offering triple tax exemption (EEE status: Exempt-Exempt-Exempt!)—contributions deductible under Section 80C (up to ₹1.5L annually!), interest earned tax-free (7.1% compounding = ₹10.6L tax-free interest on ₹22.5L invested over 15 years!), and maturity corpus tax-free (₹33.1L received = ₹0 tax on withdrawal!). This calculator answers critical questions: How much will my yearly ₹1.5L contributions grow to in 15 years @ 7.1%? (₹40.68L maturity = ₹18.18L interest!) What's the impact of interest rate changes (6.5% vs. 8%)? How do extensions work (5-year blocks post-maturity = continue compounding!)? When can I withdraw partially (after 7 years, max 50% of balance!)?
PPF is ideal for salaried employees (Section 80C tax saving!), long-term wealth builders (15-year lock-in = disciplined savings!), retirees seeking safe income (7.1% government-guaranteed vs. 6-7% FD taxable!), and parents saving for children (start PPF in child's name = ₹1.5L annual contribution!). Key features: (1) Long-term compounding: 7.1% annual compounding over 15 years = 2.71× return (₹1.5L/year → ₹40.68L maturity!), (2) Sovereign guarantee: Government-backed = ₹0 credit risk (unlike bank FDs which are DICGC insured only up to ₹5L!), (3) Partial withdrawals: After 7 years, withdraw up to 50% of balance (₹20L balance year 8 = ₹10L withdrawal allowed!), (4) Loan facility: Borrow from 3rd to 6th year @ 1% above PPF rate (₹5L PPF balance = ₹5L loan @ 8.1% vs. personal loan 12-18%!), (5) Extension flexibility: After 15-year maturity, extend in 5-year blocks (unlimited extensions!) with OR without contributions (continue compounding!).
Unlike Fixed Deposits (FD), where interest is fully taxable (7% FD @ 30% tax = 4.9% post-tax vs. 7.1% PPF tax-free = 45% more returns!), or Equity Mutual Funds (LTCG 12.5% tax on gains > ₹1.25L!), PPF offers tax-free compounding with government safety. The calculator uses actual PPF compounding logic: Annual interest credited on March 31 (based on lowest balance between 5th-end of each month!), so invest by 5th of April for full year's interest (₹1.5L deposited April 6 = interest on ₹0 for April, vs. April 4 = full month interest!). Use this for: retirement corpus building (₹1.5L/year × 25 years = ₹1.04Cr maturity!), child's future needs (start at birth, ₹1.5L/year × 18 years = ₹47.5L at adulthood!), emergency safety net (post-7 years = liquid via withdrawals!), tax-saving (₹1.5L contribution = ₹46.8k tax saved @ 30% slab + ₹10.6L tax-free interest!).
Understanding PPF Calculator Components
Yearly Investment Amount (₹500 - ₹1,50,000)
Definition: Total annual contribution to PPF account (single lump sum OR multiple installments up to 12/year).
How it works: Minimum ₹500/year (₹42/month = avoid account dormancy!), Maximum ₹1,50,000/year (₹12,500/month if monthly SIP!). Most investors max out ₹1.5L for Section 80C deduction (₹1.5L @ 30% tax = ₹46,800 tax saved!).
Example: Deposit ₹1,50,000 on April 5, 2024 (full year interest!) vs. ₹12,500/month on 5th (same interest!). But deposit ₹1,50,000 on March 20 = interest for 1 month only (April-March next year = remaining 11 months!).
Pro tip: Front-load deposits (₹1.5L by April 5 = maximum compounding!). If monthly, deposit by 5th of each month (interest calculated on lowest balance between 5th-end of month = deposit April 6 = ₹0 April interest!).
Time Period (15 - 50 years)
Definition: Lock-in duration—minimum 15 years (maturity), extendable in 5-year blocks (unlimited extensions!).
How it works: Open PPF → mandatory 15-year lock-in (partial withdrawals after 7 years, full maturity after 15). Post-maturity options: (1) Withdraw fully (close account), (2) Extend 5 years WITH contributions (continue ₹1.5L/year deposits!), (3) Extend 5 years WITHOUT contributions (existing corpus compounds at 7.1%!).
Example: Open PPF 2024 → maturity 2039 (15 years). Option A: Close, receive ₹40.68L. Option B: Extend 2040-2044 with ₹1.5L/year → 2044 balance ₹58.25L (additional ₹17.57L!). Option C: Extend 2040-2044 no contributions → ₹40.68L × 1.071^5 = ₹57.3L (₹16.62L additional interest!).
Pro tip: Extend WITHOUT contributions if don't need funds (₹40L corpus @ 7.1% = ₹2.9L/year tax-free interest = retirement income source!). Extend WITH contributions if still working (max Section 80C till retirement!).
Interest Rate (Currently 7.1% p.a.)
Definition: Annual interest rate set by Government of India quarterly (last change: Oct 2024 = 7.1%, stable since Apr 2020!).
How it works: Interest compounded annually (credited March 31 each year). Rate announced quarterly (Apr-Jun, Jul-Sep, Oct-Dec, Jan-Mar) but stable historically (2016-2020: 7.6-8%, 2020-now: 7.1%). ₹1.5L/year @ 7.1% × 15 years = ₹40.68L. @ 8% (historical high) = ₹43.5L (₹2.82L more!). @ 6.5% (if rates drop) = ₹37.9L (₹2.78L less!).
Example: ₹1,50,000/year invested: Year 1 balance ₹1.5L + 7.1% interest = ₹1.61L. Year 2: ₹1.61L + ₹1.5L deposit + 7.1% on ₹3.11L = ₹3.33L. Year 15: ₹40.68L maturity (₹22.5L invested, ₹18.18L interest = 81% return!). If rate increases to 8% from Year 6 onwards: ₹42.5L maturity (₹1.82L extra from 1% rate hike!).
Pro tip: Use 7.1% for conservative planning (current rate). Model 6.5% (downside scenario = rate cuts) and 8% (upside = rate hikes) to see range (₹37.9L-₹43.5L = plan for worst case!).
Maturity Value & Breakdown
Definition: Total corpus at end of time period = Principal invested + Compounded interest (both 100% tax-free!).
How it works: Maturity Value = sum of all annual contributions + accumulated interest. Principal % = (Total contributions ÷ Maturity) × 100. Interest % = 100% - Principal %. Example: ₹1.5L/year × 15 years @ 7.1% = ₹40.68L maturity (₹22.5L principal = 55%, ₹18.18L interest = 45%).
Example: Compare 15 vs. 25 years: (1) 15 years: ₹1.5L/year = ₹22.5L invested → ₹40.68L maturity (81% return = 1.81×). (2) 25 years: ₹1.5L/year = ₹37.5L invested → ₹1.04Cr maturity (177% return = 2.77×!). Extra 10 years = 2.5× corpus (power of compounding!).
Pro tip: Compare PPF maturity with taxable alternatives: ₹1.5L/year FD @ 7% taxable (30% tax slab) = 4.9% post-tax → 15-year maturity ₹33.9L (₹6.78L LESS than PPF!) = PPF's tax-free status = 20% more wealth!
How to Use the SBI PPF Calculator
Enter Yearly Investment Amount (₹500 - ₹1,50,000)
Input your planned annual PPF contribution. Default: ₹1,50,000 (maximum limit for Section 80C deduction). Minimum ₹500/year (to keep account active!). Use slider for quick adjustments or type exact amount.
Strategy: Max out ₹1.5L if taxable income > ₹10L (30% tax = ₹46.8k saved + tax-free compounding!). Lower amounts (₹50k-1L) if budget constrained—any PPF better than taxable FD!
Set Time Period (15-50 years)
Choose investment horizon. Default: 15 years (minimum maturity period). Extend to 20-30 years if starting young (age 30 → PPF till 60 = retirement corpus!). Use 50 years for multi-generational planning (child's PPF from birth!).
Strategy: 15 years = base corpus (₹40.68L). 20 years = ₹65.15L (+60%!). 25 years = ₹1.04Cr (+156%!). Extra 5-10 years = exponential growth (compounding magic!).
Adjust Interest Rate (Default: 7.1% p.a.)
Use current PPF rate 7.1% (Q4 FY 2024-25). Model scenarios: Conservative 6.5% (if rates drop), Optimistic 8% (historical high). Rate set quarterly by govt but stable for years (7.1% since Apr 2020!).
Strategy: Plan with 6.5% (worst case = ₹37.9L 15-year maturity) for safety. 7.1% base case (₹40.68L). 8% best case (₹43.5L = ₹5.6L range!).
Review Results & Breakdown
Maturity value displayed prominently (₹40.68L for ₹1.5L/year × 15 years @ 7.1%!). See investment breakdown (₹22.5L principal vs. ₹18.18L interest = 45% interest component!). Year-wise table shows annual deposits, interest earned, cumulative balance (track growth!).
Strategy: Check interest % (45% for 15 years, 64% for 25 years = longer = more compounding!). Use year-wise breakdown to see when 50% withdrawal available (Year 7 = ₹13.35L balance → ₹6.67L withdrawable!).
Practical Example: Building ₹1 Crore Retirement Corpus via PPF
Scenario: Rajesh (32 years, software engineer, ₹18L annual income, 30% tax bracket) wants to build tax-free retirement corpus by age 57. He decides to invest maximum ₹1,50,000/year in PPF (Section 80C benefit!) and extend post-maturity. Goal: ₹1 Crore tax-free corpus for retirement.
Calculator Inputs:
- Yearly Investment: ₹1,50,000 (max limit for 80C deduction)
- Time Period: 25 years (age 32 → 57, 15-year base + 10-year extension)
- Interest Rate: 7.1% p.a. (current PPF rate, conservative = stable govt rate)
Calculator Outputs:
- Total Investment: ₹37,50,000 (₹1.5L/year × 25 years)
- Maturity Value: ₹1,04,00,000 (₹1.04 Crore – GOAL ACHIEVED!)
- Total Interest Earned: ₹66,50,000 (₹66.5L tax-free interest = 64% of corpus!)
- Tax Saved: ₹11,25,000 (₹37.5L contributions @ 30% = ₹11.25L Section 80C benefit!) + ₹19,95,000 (₹66.5L interest, if taxed @ 30% = ₹19.95L saved!) = ₹31.2L total tax advantage!
- Effective Return: 177% (₹37.5L → ₹1.04Cr = 2.77× wealth!)
Year-wise Milestone Breakdown (Key Years):
- Year 1 (2024): Deposit ₹1.5L (April 5 for full year interest!), Year-end balance ₹1.61L (₹11k interest earned!)
- Year 3 (2026): Balance ₹5.08L (₹1.5L × 3 deposits + ₹58k interest). Loan facility now available (borrow up to ₹5L @ 8.1% = PPF rate + 1%!).
- Year 7 (2030): Balance ₹13.35L (₹10.5L deposits + ₹2.85L interest). Partial withdrawal UNLOCKED (max 50% = ₹6.67L withdrawable if emergency!)—but Rajesh doesn't withdraw (maximize compounding!).
- Year 15 (2038): PPF matures! Balance ₹40.68L (₹22.5L invested + ₹18.18L interest). Rajesh extends 5 years WITH contributions (goal ₹1Cr!).
- Year 20 (2043): Balance ₹65.15L (₹30L invested + ₹35.15L interest). Extends another 5 years.
- Year 25 (2048): Final maturity ₹1.04Cr! Rajesh retires, receives ₹1.04Cr TAX-FREE (₹0 TDS, ₹0 LTCG, 100% in hand!).
Post-Retirement Strategy:
Instead of withdrawing ₹1.04Cr, Rajesh extends PPF 5 years WITHOUT contributions (corpus compounds @ 7.1%!). Year 30 (2053, age 62): Balance ₹1.46Cr (₹1.04Cr × 1.071^5 = additional ₹42L!) = withdraws ₹50L for house renovation, keeps ₹96L in PPF. Year 35 (2058, age 67): ₹96L → ₹1.35Cr (₹39L more interest!) = withdraws ₹50L for daughter's wedding, keeps ₹85L. Age 72 (2063): ₹85L → ₹1.2Cr (another ₹35L interest!) = legacy for grandchildren! Total tax-free interest from age 57-72: ₹1.16Cr (₹66.5L during contributions + ₹1.16Cr post-retirement = ₹1.82Cr total interest on ₹37.5L invested = 4.85× wealth!)
Key Insight: PPF's EEE tax status (Exempt-Exempt-Exempt) = contributions deductible (₹11.25L tax saved!), interest tax-free (₹66.5L untaxed!), maturity tax-free (₹1.04Cr in hand!) = total ₹31.2L tax advantage vs. taxable FD (7% FD @ 30% tax = 4.9% post-tax → 25-year maturity ₹72.5L vs. PPF ₹1.04Cr = ₹31.5L more wealth = 43% better returns!). Extension flexibility = post-retirement income source (₹1.04Cr → ₹1.46Cr in 5 years = ₹8.4L/year tax-free passive income!). Start early (age 30 vs. 40 = 10 extra compounding years = ₹40L vs. ₹18L corpus difference!), max out ₹1.5L annually (₹12.5k/month auto-debit from salary!), deposit by 5th of month (maximize interest!), don't withdraw (7-year withdrawal option = emergency only, not routine!), extend post-maturity (₹40L @ 7.1% = ₹2.9L/year interest = beats fixed deposit income!).
Why PPF Matters for Your Financial Security
- 1. Triple Tax Exemption (EEE Status)—₹31L Tax Savings Over 25 Years: PPF is one of only 3 instruments in India with full EEE (Exempt-Exempt-Exempt) status! (1) Contributions exempt: Up to ₹1.5L/year deductible under Section 80C (₹1.5L @ 30% tax = ₹46.8k saved annually, ₹11.7L over 25 years!). (2) Interest exempt: 7.1% compounding tax-free (₹66.5L interest on ₹37.5L invested = if taxed @ 30% = ₹19.95L saved!). (3) Maturity exempt: ₹1.04Cr withdrawal = ₹0 TDS, ₹0 LTCG (vs. FD maturity taxed as income!). Total tax advantage: ₹31.65L saved! Compare with alternatives: (A) Bank FD: Interest fully taxable (7% FD @ 30% tax = 4.9% post-tax), TDS deducted (10% on interest > ₹40k!), maturity taxable (₹66.5L interest taxed = ₹19.95L tax!). (B) Equity Mutual Funds: LTCG 12.5% on gains > ₹1.25L (₹66.5L gains = ₹8.15L tax vs. PPF ₹0!). (C) NSC (National Savings Certificate): Section 80C deduction YES, but interest taxable annually (even if not received = phantom tax!), maturity taxable (accrued interest added to income!). PPF uniquely combines safety + returns + tax-free status = ideal for risk-averse wealth builders!
- 2. Sovereign Guarantee—Zero Credit Risk, Beats Bank FD Safety: PPF backed by Government of India (sovereign guarantee = ₹0 default risk!), unlike banks which rely on DICGC insurance (only ₹5L per bank per depositor!). Example: Bank failure → FD > ₹5L = loss risk (Yes Bank 2020 = depositors faced haircuts!). PPF = unlimited corpus safety (₹1Cr PPF = fully guaranteed!). Interest rate stability: PPF rate set by govt quarterly but historically stable (7.1% since Apr 2020, vs. bank FDs fluctuating 5-7.5%!). Lock-in advantage: 15-year mandatory tenure = govt commits to honor rate for full term (FD rates change every quarter = reinvestment risk!). Inflation protection: 7.1% PPF vs. 6-6.5% inflation (2024) = real return 0.5-1.1% (positive real return = wealth preservation!). FD 7% taxable @ 30% = 4.9% post-tax vs. 6% inflation = -1.1% real return (wealth erosion!). For retirees: ₹50L PPF corpus = ₹3.55L/year tax-free interest (₹29.5k/month!) vs. ₹50L FD @ 7% = ₹2.45L/year post-tax (₹20.4k/month) = PPF 45% more income!
- 3. Partial Withdrawal & Loan Facility—Liquidity Without Breaking FD: Despite 15-year lock-in, PPF offers liquidity: (1) Partial withdrawal (after Year 7): Withdraw up to 50% of balance at end of Year 4 (or 50% of previous year balance). Example: Year 7 balance ₹13.35L → max withdrawal ₹6.67L (50% of Year 4 balance ₹8.7L OR 50% of Year 6 = use lower!). One withdrawal/year allowed (plan for emergencies: medical, education!). No penalty, no interest loss (remaining balance continues @ 7.1%!). (2) Loan facility (Year 3-6): Borrow from own PPF @ PPF rate + 1% (7.1% + 1% = 8.1% vs. personal loan 12-18%!). Max loan: 25% of balance at end of 2 years prior (Year 5 loan = 25% of Year 3 balance!). Repay within 36 months (EMI auto-deducted from PPF or external payment!). Use case: Short-term liquidity (business working capital, child's exam fees!) without losing tax benefits (loan NOT a withdrawal = Section 80C intact!). Compare with FD: Breaking FD before maturity = penalty 0.5-1% interest loss + reinvest at lower rate! PPF withdrawal/loan = ₹0 penalty, remaining corpus compounds uninterrupted!
- 4. Extension Flexibility—Post-Maturity Income Source for Retirees: After 15-year maturity, extend in 5-year blocks (unlimited extensions!): (1) Extend WITH contributions: Continue depositing ₹1.5L/year, keep compounding (Year 15 ₹40.68L → Year 20 ₹65.15L = additional ₹24.47L!). Section 80C benefit continues (tax savings till retirement!). Use if still working (age 47 at maturity, extend till 62 = build ₹1Cr+ corpus!). (2) Extend WITHOUT contributions: Deposit ₹0, existing corpus compounds @ 7.1% (₹40.68L → ₹57.3L in 5 years = ₹16.62L interest!). Tax-free passive income (₹40L @ 7.1% = ₹2.84L/year = ₹23.7k/month tax-free!). Use post-retirement (age 60 maturity, extend till 75 = pension substitute!). Comparison: ₹40L Senior Citizen Savings Scheme (SCSS) @ 8.2% = ₹3.28L/year BUT fully taxable (₹3.28L @ 20% tax = ₹65k tax = net ₹2.63L!) vs. PPF ₹2.84L tax-free = PPF 8% more income + no TDS hassle! Flexibility: Withdraw partially anytime during extension (need ₹10L = withdraw, keep ₹30L compounding!). Strategic use: Extend till age 75-80 (corpus grows), pass to children tax-free (₹1Cr+ legacy, ₹0 inheritance tax India!).
- 5. Child's Future Planning—Start at Birth, ₹47.5L at Age 18: Open PPF in minor's name (parent/guardian operates till age 18!), separate ₹1.5L limit (parent's ₹1.5L + child's ₹1.5L = ₹3L total/year Section 80C!). Example: Newborn child (2024), invest ₹1.5L/year till age 18 (2042). Calculator: ₹1.5L × 18 years @ 7.1% = ₹27L invested → ₹47.5L maturity (₹20.5L interest = 76% return!). Use at age 18: College fees ₹20L (withdraw 50% after Year 7 = ₹10L, balance compounds!), remaining ₹27.5L → extend for marriage/first home! Tax efficiency: Child's PPF = parent's Section 80C (₹1.5L deduction!), interest tax-free (₹20.5L untaxed!), maturity to child tax-free (gift from parent = ₹0 tax u/s 56 for lineal descendants!). Compare with Child Education Plans (ULIP): ULIP charges 3-5% annually (₹1.5L × 18 = ₹27L invested → ₹38L maturity after charges vs. PPF ₹47.5L = ₹9.5L more = 25% better!), ULIP maturity taxable if > ₹2.5L annual premium (₹20.5L gains taxable!). PPF superior: Zero charges, tax-free, flexible withdrawals (ULIP lock-in 5 years, surrender charges 3-4% if withdrawn early!).
- 6. Disciplined Long-Term Wealth Building—₹1Cr Corpus Guaranteed: 15-year lock-in = forced savings (can't withdraw impulsively like savings account!), ideal for behavioral finance (avoid lifestyle inflation!). Example: ₹1.5L/year investment discipline (₹12,500/month auto-debit from salary!) = ₹40.68L maturity (vs. spending ₹12.5k/month on dining/shopping = ₹0 wealth!). Compounding magic: Year 1-5 = slow growth (₹8.7L balance = ₹4.5L interest, 52% of contributions). Year 10-15 = exponential (₹40.68L balance = ₹18.18L interest, 81%!). Year 20-25 = wealth multiplier (₹1.04Cr = ₹66.5L interest, 177%!). Time value lesson: Start age 25 (₹1.5L/year × 35 years till 60) = ₹1.73Cr maturity (₹52.5L invested → ₹1.21Cr interest = 3.3× wealth!). Start age 35 (25 years till 60) = ₹1.04Cr (₹37.5L → ₹66.5L interest = 2.77×). Start age 45 (15 years till 60) = ₹40.68L (₹22.5L → ₹18.18L interest = 1.81×). 10-year delay = ₹69L less corpus (40% wealth loss!). Encourages early start + consistent investing = habit formation (₹1.5L annual = non-negotiable like rent/EMI!). Post-maturity wealth: ₹40L corpus = financial freedom (early retirement option, business capital, child's wedding/education buffer, medical emergency fund!). Use calculator annually: Track progress (Year 5 = ₹8.7L, on track? Yes! Year 10 = ₹20.9L? Yes!), adjust if needed (salary hike = increase from ₹1L to ₹1.5L!), model future (current ₹15L balance, 10 years left = ₹35L projected maturity!).
Frequently Asked Questions
Lumpsum by April 5 maximizes interest! PPF interest calculated on lowest balance between 5th and end of each month, credited annually on March 31. Deposit timing critical!
Example—Lumpsum vs. Monthly: (1) Lumpsum April 5: Deposit ₹1,50,000 on April 5, 2024. Interest: April ₹1.5L, May ₹1.5L, ..., March ₹1.5L = ₹1.5L × 12 months × 7.1%/12 = ₹10,650 Year 1 interest. (2) Monthly ₹12,500 on 5th: April ₹12.5k (interest on ₹12.5k for 1 month!), May ₹25k (₹12.5k + ₹12.5k, but interest on ₹12.5k only for May, ₹25k for June onwards!), average balance lower = ₹5,737 Year 1 interest (46% LESS than lumpsum!). (3) Monthly ₹12,500 on 6th (after 5th!): April deposit on 6th = ₹0 April interest (balance ₹0 on 5th-31st April!). May deposit 6th = ₹0 May interest. Year 1 interest ≈ ₹4,200 (₹6,450 LESS = 61% loss!).
Optimal strategy: (1) Best: Lumpsum ₹1.5L by April 5 (within 5 days of financial year start = maximize compounding!). Arrange funds: Bonus/tax refund in March → deposit April 5 (not March 31 = only 1 month interest FY 2024-25!). (2) Good: If lumpsum not possible, deposit by 5th of EVERY month (₹12,500 × 12 = ₹1.5L). Set auto-debit for 4th (in case 5th is holiday, bank processes 4th!). Never deposit after 5th (interest loss!). (3) Acceptable: Deposit whenever funds available BUT front-load (₹50k April, ₹50k May, ₹50k June = better than ₹50k Oct, ₹50k Nov, ₹50k Dec!).
Interest calculation example (3-month snapshot): April 5: Deposit ₹50,000. Balance ₹50k on 5th-30th April = ₹50k × 7.1%/12 = ₹296 interest (credited March 31, 2025). May 5: Deposit ₹50,000. Balance ₹1L (₹50k April + ₹50k May) on 5th-31st May = ₹1L × 7.1%/12 = ₹592 May interest. June 5: Deposit ₹50,000. Balance ₹1.5L on 5th-30th June = ₹1.5L × 7.1%/12 = ₹888 June interest. Total April-June interest ₹1,776 vs. if deposited June 6 = ₹0 interest (entire ₹1.5L treated as zero balance for Apr-Jun calculation!).
Why 5th matters: PPF rule: Interest = (Lowest balance from 5th to last day of month) × (Rate/12). Deposit April 4 = ₹1.5L on 4th-30th, but "lowest balance 5th-30th" = ₹1.5L (4th deposit counted!). Deposit April 6 = ₹0 balance on 5th, ₹1.5L on 6th-30th → lowest ₹0 = ₹0 April interest! Government designed this to encourage early-month deposits (maximize annual interest = better investor outcome!).
Partial withdrawal allowed after Year 7 (from 7th financial year onwards!), but full withdrawal only at maturity (15 years). Rules designed for emergencies, not regular income!
Partial withdrawal eligibility & limits: (1) When: From 7th financial year till maturity (opened FY 2020-21 = withdrawals from FY 2026-27 onwards!). (2) How much: Maximum 50% of balance at end of 4th year preceding the year of withdrawal OR 50% of balance at end of immediately preceding year, whichever is LOWER. Confusing? Example: Year 2024-25 is 8th year. Withdrawal limit = min(50% of Year 2020-21 balance [4 years prior], 50% of Year 2023-24 balance [immediately preceding]) = use LOWER figure! (3) Frequency: ONE withdrawal per financial year (April-March). (4) Tax: Withdrawal tax-free (EEE status = ₹0 TDS!).
Practical example—Year 8 withdrawal: PPF opened April 2020, ₹1.5L/year deposited. Balances: Year 4 (March 31, 2024) = ₹6.98L. Year 7 (March 31, 2027) = ₹13.35L. Year 8 (FY 2027-28): Want to withdraw. Calculation: Option A: 50% of Year 4 balance = ₹6.98L × 50% = ₹3.49L. Option B: 50% of Year 7 balance = ₹13.35L × 50% = ₹6.67L. Withdrawal limit = ₹3.49L (lower of two!). Can withdraw ₹3.49L (or any amount up to ₹3.49L, e.g., ₹2L if need less!). Remaining balance ₹13.35L - ₹3.49L = ₹9.86L continues compounding @ 7.1%!
Strategic use of withdrawals: (1) Emergencies only: Medical bills, job loss, child's urgent education fees = justified (avoid breaking PPF otherwise = lose compounding!). (2) Minimize withdrawal: Need ₹2L, eligible for ₹3.49L → withdraw ₹2L only (keep ₹1.49L in PPF for growth!). (3) Replenish: Withdrew ₹3L Year 8, Year 9 deposit ₹1.5L (maximum contribution = can't "top up" withdrawn amount separately! Total contribution limit ₹1.5L/year regardless of withdrawals!). Year 10: Balance recovered to ₹11.5L (vs. ₹16.8L if didn't withdraw = ₹5.3L opportunity cost!).
Pre-mature closure (before 15 years): Generally NOT allowed, exceptions: (1) Medical emergency: Life-threatening illness (self, spouse, children) with hospital bills. Submit medical certificate + bills, bank may allow closure after 5 years (subject to approval, not guaranteed!). (2) Higher education: Child's education (engineering, medical college abroad). Submit admission letter + fee invoice. Allowed after 7 years (but better to use partial withdrawal, not full closure!). (3) Penalty: If closure approved, interest reduced by 1% (7.1% → 6.1% for entire tenure = ₹2-3L loss on ₹20L corpus!). Example: 10-year PPF, ₹1.5L/year @ 7.1% = ₹21.74L, close early = recalculated @ 6.1% = ₹19.95L (₹1.79L penalty = 8.2% loss!).
Recommendation: Treat PPF as long-term untouchable corpus (like retirement fund!). Use partial withdrawal only if: (A) No other option (emergency fund exhausted, no loan access!). (B) Withdrawal < 25% of balance (keep majority compounding!). (C) Post-Year 10 (early withdrawals hurt compounding = ₹3L Year 7 withdrawal = ₹4.7L opportunity cost by Year 15!). For planned expenses (car, vacation), use separate savings (FD, liquid funds!), keep PPF intact = ₹40L+ maturity guaranteed!
Extend PPF if you value safety + tax-free income (retirees, risk-averse!). Switch to equity if you're young + can handle volatility (higher long-term returns but taxable!). Decision depends on age, risk appetite, tax situation, and income needs.
PPF extension benefits (best for retirees!): (1) Tax-free income: ₹40L corpus @ 7.1% = ₹2.84L/year (₹23.7k/month) 100% tax-free! No TDS, no ITR hassle (vs. pension/FD taxed as income!). (2) Zero risk: Sovereign guarantee (govt-backed = ₹0 default risk!), unlike equity (market crash 2008 = -50%, 2020 = -40%!). (3) Predictable: 7.1% stable (vs. equity 12-15% average BUT -20% to +40% annual swings = stress!). (4) Simple: Extend form online/branch (5 min!), no rebalancing/monitoring (vs. equity = track NAV, market news daily!). (5) Legacy planning: Extend till age 75-80, pass ₹1Cr+ to children tax-free (no capital gains, no inheritance tax India!).
When to extend PPF: (A) Retiree (age 60+): Need steady, tax-free income (₹2.84L/year = supplement pension!). No other tax-exempt options (SCSS 8.2% taxable, FD 7% taxable!). Extend WITHOUT contributions (₹40L compounds to ₹57L in 5 years = ₹17L additional!). (B) Risk-averse: Can't stomach equity volatility (2008 crash took 5 years to recover!). Sleep peacefully with 7.1% guaranteed vs. 12% equity with -20% years! (C) High tax bracket: 30% slab = tax-free PPF 7.1% = equivalent to 10.14% taxable (7.1% ÷ 0.7 = 10.14%!). No equity MF gives 10%+ LTCG after 12.5% tax consistently! (D) Already have equity exposure: 60% equity portfolio (₹60L stocks/MFs), PPF extension adds debt stability (40% PPF = balanced 60:40 allocation!).
Equity mutual fund alternative (best for young investors!): (1) Higher long-term returns: Equity MF 12-15% p.a. over 15-20 years (Nifty 50 CAGR 1999-2024 = 12.8%!). ₹40L @ 12% × 15 years = ₹2.2Cr vs. PPF ₹1.14Cr (₹1.06Cr more = 93% better!). (2) Inflation protection: 12% equity return vs. 6% inflation = +6% real return (PPF 7.1% - 6% inflation = +1.1% real return = 5× less wealth preservation!). (3) Flexibility: Withdraw anytime (no 15-year lock-in!), SWP for income (₹40L equity, withdraw ₹3L/year = 7.5% SWP rate, corpus grows to ₹60L in 10 years @ 12% despite withdrawals!). (4) Tax efficiency: LTCG 12.5% only on gains > ₹1.25L (₹40L → ₹80L = ₹40L gains, tax ₹4.8L = net ₹75.2L vs. PPF ₹57L = equity ₹18L more = 32% better even after tax!).
When to switch to equity: (A) Young (age < 50): 15-20 year horizon to retirement = ride out market cycles (equity volatile short-term, stable long-term!). ₹40L @ 12% till age 65 = ₹1.4Cr vs. PPF ₹1.14Cr (₹26L more!). (B) High risk appetite: Comfortable with -20% drawdowns (2020 crash = stayed invested, recovered to +18% by Dec 2020!). (C) Other income sources: Pension ₹5L/year + rental ₹3L = ₹8L income, don't need PPF ₹2.84L (invest for growth, not income!). (D) Tax optimization: Retired, total income ₹5L = 5% tax bracket → equity LTCG 12.5% on gains > ₹1.25L = minimal tax (₹10L gains = ₹1.09L tax = 10.9% effective vs. active income 30%!).
Hybrid strategy (best for 50-60 age group!): Extend PPF for 5 years (₹40L → ₹57L guaranteed = base retirement corpus!), invest NEW savings in equity (salary ₹10L, PPF maxed ₹1.5L, invest additional ₹3L/year equity SIP = diversified!). By age 65: PPF ₹57L (safe bucket) + Equity ₹50L (growth bucket) = ₹1.07Cr total (₹70L PPF tax-free, ₹20L equity gains taxed ₹2.4L = net ₹1.05Cr vs. all-PPF ₹1.14Cr = comparable BUT hybrid more flexible!). SWP strategy: Withdraw ₹3L/year from PPF (tax-free!), let equity grow (₹50L @ 10% = ₹5L annual growth > ₹3L PPF withdrawal = corpus increases to ₹52L Year 2!).
Bottom line: PPF extension = safety, tax-free, predictable (ideal 60+ retirees, risk-averse, high tax bracket!). Equity = growth, inflation-beating, flexible (ideal < 50 age, long horizon, risk-tolerant!). Hybrid = best of both (50-60 age, transition to retirement, balanced portfolio!). Use calculator: Model PPF extension (₹40L → ₹1.14Cr in 20 years @ 7.1%), compare with equity projection (₹40L → ₹2.2Cr @ 12% BUT factor -20% worst-case years = ₹1.6Cr realistic = still 40% better, decide based on risk comfort!).