A PPF Calculator

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PPF calculator refers to the simple calculator that determines interest earned on your investment in PPF account. The basic idea behind PFF calculator is compounding the interest on your investment. Although, you can exercise this method manually when you have to calculate interest for one year. But when it comes down to fifteen or ten years, the calculations can be messier but no need to worry simple PPF calculators can help you do all the calculations. Before we go to details of PPF calculator, Let’s understand more about PPF account, its features and benefits

What Is Public Provident Fund Account?

In simple words, Public Provident Fund is the saving scheme that helps individuals to build the retirement corpus and also save taxes. With this scheme, you can invest your savings for fixed period and will earn the periodic interest (compounded annually). Currently, the PPF interest rate is 8.1%! That is reasonable!

PPF account can be opened with a low and affordable amount of deposit. The second attraction to this scheme is the tax benefits. The interest earned is completely tax-free. And, this scheme is backed by the government, so comes with security. No doubt, why PPF is so popular in India!

PPF is easily accessible. You will face no problem while registering for the account. To open a new account, you have to visit the authorized bank or post office. Simply, get the form, fill it and submit with required documents. PPF accounts can be opened in all PSU banks and some select private banks.

Why Should You Choose PPF Scheme?

Some people don’t opt for PPF scheme because they don’t know its awesome features and benefits. For your convenience, I have outlined some of them as follows:

Interest Rate: The Indian Government set the interest rate for PPF periodically Currently the review period is quarter. You earn interest on investment which is compounded annually. Current interest rate is 8.1%, which is pretty good.

Tenure: To avail the benefits of PPF, you need to keep the account active for fifteen years. It means you need to invest in this account per year for fifteen years. After maturity, you can invest for further five years.

Initial Deposit: You can open the account with Rs. 100.

Minimum/Maximum Annual Deposit: To keep the account active, you have to make a deposit every year. The minimum amount is Rs. 500 and the maximum are Rs. 1.5 lacs per years. You can make deposits with a cheque, cash, PO, online funds transfer and DD, etc.

Withdrawals: Withdrawal is allowed after maturity. Well, premature withdrawal can be made, but on certain conditions and after seven years from opening date. Otherwise, premature withdrawal is not possible!

Tax Advantages: The tax rebate is the main attraction of PPF. The interest earned is completely tax-free

How To Calculate The Interest Using PPF Calculator?

Calculation of PPF interest is not difficult. So what is the exact algorithm of PPF calculator? As mentioned in the start, the interest will be compounded annually. For instance, you have made the initial investment of Rs. 1.5 lac. So, you will calculate the interest on Rs. 1.5 lacs at the rate of 8.1%. Pretty easy right! Now, we have to compound it. Next year, you will make an investment of Rs. 1.5 lacs again. Now, the rate will be applied to the sum of previous year’s balance including interest earned and current year’s balance. And this process will be continued for fifteen years. You can use a simple calculator below to calculate interest and yearly balance for PPF calculator.

Author: Sarabdeep Singh; Co-founder, an online financial advisor.

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