26 thoughts on “PPF Account, Interest rate, Rules & PPF Calculator”

  1. Hello,
    I have a query between PPF and VPF. I am a salaried person and already contributing EPF. Now I want to invest either in VPF or in PPF. My query is that:
    1) VPF interest is more than PPF. But if I contribute in VPF, part of it will go to EPS. After retirement I will not be able to withdraw EPS amount.
    2) Though PPF interest amount is low still I can with drawn full amount.
    Please suggest whether to invest in VPF or PPF.

  2. VPF current rate of interest is 8.5% per annum, whereas PPF’s is 7.6%(varies quarterly). I am a government employee, appointed on May 2016. I am already having a CPS account. In order to get more tax benefit and also for futures savings I also want to invest in either PPF or VPF. My doubt is, whether PPF yields more return or VPF? I am confused on quarterly interest calculations of PPF. Could you please help me in this.

  3. I have a PPf a/c with SBI since 2003 in the name of my HUF. Now, it was due on 31.3.2018. I had sent extension form to SBI, they denied extending the same as its not allowed. I am quite confused as at some place it says I can keep extending existing PPF a/c but cannot open new one. Kindly help.

  4. Hi, if I started PPF A/c with interest rate 7.8% and if interest rate decreases to 7.6% in next year then, what interest rate shall I get 7.8 or 7.6% on my invested amount? Please reply.

  5. I have extended my PPF account after completion of 15 years and I want to know the partial withdrawals during the extended period will be same as the formula for partial withdrawal allowed during the 5 years i.e. 50% of the balance available in the past three years.If I want to withdraw partially is it 50% of balance available in my account as on 31.03.2015 of 31.03.2017 (50% of the lowest balances of these two years). Please guide.

    • Hello Sir, The withdrawal rules are slightly different if you extend your PPF account beyond 15 years with further contribution.In such a case,you will be allowed to withdraw 60% of the balance at the beginning of each extended period (block of five years). It means, let us say your account matured on 1st April, 2016.You shall be allowed 60% withdrawal during the block period of 5 years(extension period).This may be withdrawn either in a single withdrawal or in instalment in each year.Further,do clarify with your bank for the necessary form to be filled and any changes thereon.

  6. Is there any difference in interest rate with respect to PPF and VPF/EPF?
    Which is the better for long term investment.

    • Hi, The present interest rate on PPF has been reduced to 7.9% p.a. for the quarter Apr’17 to Jun’17. You can invest a maximum of 1.5 lakhs during a financial year and claim a tax deduction under section 80C for the amount contributed.
      While the EPF is deducted from your salary by the employer if you are a salaried employee.The interest rate on EPF is 8.65% p.a. The employer’s contribution is exempt from tax and your contribution (i.e.employee’s contribution) is considered under section 80C investments. Looking at interest rates, EPF is anyways giving higher returns.

      • Thanks for your reply. I am a salaried employee. I am planning for VPF. Is it same as EPF (VPF is without Employer contribution).

        Already my savings crossed 1.5 lakhs. So VPF will be still be tax exempted when I withdraw the amount after several years. Please let me know more inputs on VPF.

        Also please let me know, is it good to go with VPF or with Mutual bonds.

        • Hello Sir,
          VPF is a further extension of EPF where you voluntarily contribute a % of your salary to Provident fund.Also,the employer contributes towards EPF only and is not liable to contribute for VPF.The interest rate on VPF is similar to EPF.Further,VPF also enjoys similar tax benefits as EPF like the contribution made is eligible for tax deduction u/s 80C. You can claim a tax deduction U/s 80C upto a maximum of Rs.1.5 lakhs only.Since,you already cross your 1.5 lakh limit in other eligible investments,this point might not matter for you. The maturity returns are tax free like in EPF (provided you are in service for a continuous period of 5+ years and don’t withdraw the amount before that period). If you are a risk averse investor,then such investments like VPF and PPF that generate fixed returns are good. But,if you can expand your risk horizon then only you should move towards mutual funds.Thanks.

  7. Very informative article. I just want to know that whether the PPF account can be opened online through the bank’s website?

  8. Wow !! A very well written article. Thank you. I am planning to open a PPF a/c in SBI and deposit INR 1.5 L. If I open an a/c in the next few days considering today as 19-03-2017 then from when will the interest be calculated ? When should I deposit the money in the account ? Within how many days of creation of the account must I make a deposit ? The duration of 15 years begins from when, from date of creation of account or the date of first deposit made ? Suppose the bank creates my account on 27-03-2017 then can I make a deposit of 1.5L on or after 1-4-2017 ? Should my date of account creation be between 1-04-2017 to 05-04-2017 for the calculation of 15 years ?

    • Thanks Rohan,you need to know following points :
      1.Firstly,if you open a PPF account in the month of March as you are thinking,the contribution you make shall qualify for tax deduction under section 80C for financial year 2016-17. But,if you open the account on or after 1st April 2017 the investment shall count for deduction for the next financial year.
      2.The interest on balance in your PPF account is compounded annually and is credited at the end of the year. But,here you need to know that the interest calculation is done every month: the interest is calculated on lowest balances in account between 5th and last day of the month.So if you don’t deposit on/before the 5th of a month, you don’t earn interest for that month.
      3.To earn maximum interest it is better to deposit amount in PPF account on or before 5th of every month.
      4.The maturity period for PPF account is 15 years from the close of the financial year in which the initial subscription was made.If you open PPF account in March then, financial year ends on 31st March,2017.Hence,the maturity period shall be calculated from end of financial year i.e.31st March,2017.
      5.The PPF account opening time is usually based on how fast the bank processes your application.Normally,it does not take much time if you submit all the requisite documents.

  9. My father is retired now and he got 10 lakhs on his retirement. Will ppf be beneficial to invest in lumpsum amount.how to invest so that he can get monthly interest over that amount with no risk.

    • Hi Khushi,

      At this point, safety of your money i.e.principal amount is more important.Your father might not opt to take high risk at this stage, so you can choose from the safer options like :-
      1. Bank Fixed deposits : You can keep some amount in FDs to avail easy withdrawal facility,in case you need your money in between for some personal reasons.You will not get high returns but fixed returns based on type of FD.
      2.Senior Citizen Saving Scheme : Investment limit is Rs.15 lakhs, investment duration is 5 years that can be further extended by 3 years.Interest is paid on quarterly basis. It qualifies for Section 80 C tax deduction also.
      3.Post Office Saving Scheme : You can refer our detailed post http://fintrakk.com/post-office-small-saving-schemes-in-india/
      4.Debt Mutual funds : They carry some risk but are a much safer option than equity funds.The underlying asset is debt,so considered a safer option to earn good returns and grow your money.However,if you are not comfortable taking any risk,this option might not suit you.
      Regarding PPF,the present rate of interest is 8% p.a.and you can invest upto a maximum of Rs.1.5 lakhs only. PPF has been a common investing option.So,I think your father might already be having a PPF account,if so continuing the same is fine.
      You can anyways distribute your money in different risk free options.

  10. Can I change the saving per year?
    Suppose I save 48,000 for first year and Is it possible to save 96,000 or any another amount for next year?

    • Yes,you can contribute a minimum of Rs.500 to a maximum of Rs.1.5 lakhs to PPF Account during a financial year.
      You can increase or decrease the PPF contribution as per your convenience, you just need to maintain the minimum contribution amount of Rs.500.

  11. PPF is a good investment due to its tax free nature.The reducing interest rate is a point of concern but still it is a good and safe long term investment for people who can’t afford any risk.

  12. Suppose i deposit 1 lakh in sep 2016 and continue to do so for next 15 years ,will i be able to withdraw the entire amount at the end of 15 years.

    • Yes,at maturity,you can close the account and withdraw the whole amount.But,you can also extend your PPF account for further 5 years with or without further contribution.
      Here,one thing to be considered is that if you open the account in Sep 2016,then 15 years count starts from 1st April’17 for maturity calculation.
      Also,earlier partial withdrawal is allowed subject to some conditions like medical grounds or higher education etc.


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