PPF (Public Provident Fund) Estimation Tool

A Public Provident Fund (PPF) is an investment scheme where you contribute a fixed amount at regular intervals into a Fund (or Account). This makes it similar to a fixed deposit offered by a bank. Still, the difference being, PPF is backed by the Government of India, thus offering safety and comparatively a higher rate of interest. Also, the returns are exempt from tax. Subject to conditions, you can also avail loans against your fund balance, and partial withdrawals are allowed. PPF makes it an ideal product among the risk-averse investor group.

A Gist of Features
Investments can range between Rs.500(min) and Rs.1,50,000(max) in a financial year.
Current Rate of Interest Payable is 7.1% per annum.

Loans can be availed against fund balance between year 3 to 6.

One withdrawal is permissible every year from 7th financial year.

Account matures on completion of 15 financial years from the end of the year in which the account was opened.

Post maturity, the account can be extended for blocks of 5 years each with further deposits.

Account can also be retained indefinitely (without further deposits) after maturity with the prevailing rate of interest.

Deposits qualify for Deduction under Sec.80C of the Income Tax Act.

Interest earned is completely Exempt from tax under Sec.10(15) of the Income tax Act.

The amount in the PPF account is not subject to attachment under any order or decree of a court of law.

Further, a PPF account has a lock-in period of 15 years on investment, before which funds cannot be withdrawn completely. An investor can choose to extend this tenure by 5 years after the expiry of lock-in period.

A minimum of Rs. 500 and a maximum of Rs. 1.5 Lakh can be invested in a provident fund scheme annually. This investment can be undertaken in a lumpsum or installment basis. However, an individual is eligible for only 12 yearly instalment payments into a PPF account. Investment has to be made every year to ensure that the account remains active.

Estimated PPF Calculation



PPF Details

Year Opening Balance Deposit Interest Closing Balance * Maximum Loan * Maximum Withdrawal

Maximum Loan: Loan facility is available on balance in PPF account from completion of the 3rd year till the end of the 6th year, calculated from the date of account opening.
The maximum loan that can be availed is 25% of the Opening balance of the PPF account for the previous year.
After completion of the 6th year from the date of PPF account opening, no loan can be availed, but partial withdrawals can be made.

Maximum Withdrawal: Partial withdrawal from PPF account is allowed after completion of the 6th year i.e. the beginning of 7th year onwards.
The maximum withdrawal amount is the lesser of:
50% of the account balance at the end of the previous year calculated from year in which withdrawal is made, or 50% of the account balance at the end of the 4th year preceding the year in which withdrawal was opted for.

* The maximum loan & withdrawal amounts in the table are based on the assumption that no loans/withdrawals have been made during the previous years.

Public provident funds provide the benefit of availing loans against the investment amount. However, the loan will only be granted if it is taken at any time from the beginning of 3rd year till the end of the 6th year from the date of activation of account.
The maximum tenure of such loans against PPF is 36 months. Only 25% or less of the total amount available in the account can be claimed for this purpose.
The interest payable on public provident fund scheme is determined by the Central Government of India. It aims to provide higher interest than regular accounts maintained by various commercial banks in the country.
Interest rates currently payable on such accounts stands at 7.1% and is subject to quarterly updates at the discretion of the government.

Tax Benefits
Income tax exemptions are applicable on the principal amount invested in a PPF account. The entire value of investment can be claimed for tax waiver under section 80C of the Income Tax Act of 1961. However, it should be kept in mind that the total principal that can be invested in one financial year cannot exceed Rs.1,50,000.

The total interest accrued on PPF investment is also exempt from any tax calculations.

Therefore, the entire amount redeemed from a PPF account upon completion of maturity is not subject to taxation. This policy makes the public provident fund scheme attractive to many investors in India.

The formula used for calculating PPF
F = P [({(1+i) ^n}-1)/i]
i = Rate of interest
F = Maturity of PPF
n = Total number of years
P = Annual instalments

Eligibility Criteria
Indian citizens residing in the country are eligible to open a PPF account in their name. Minors are also allowed to have a Public provident fund account in their name, provided it is operated by their parent/guardian.

Non-residential Indians are not permitted to open a new PPF account. However, any existing account in their name remains active till the completion of tenure. These accounts cannot be extended for five years – a benefit available to Indian residents.

How to Open a PPF Account
Both offline and online procedures are available for an individual provided they meets requisite parameters mentioned in the eligibility criteria. Activating PPF online can be done by visiting the portal of a chosen bank or post office.

The following documents have to be produced at the time of activation of a public provident fund account –
KYC documents verifying the identity of an individual, such as Aadhaar, Voter ID, Driver’s License, etc.

PAN card.

Residential address proof.

Form for nominee declaration.

Passport sized photograph.

There are multiple clauses that an individual must adhere to in case they wants to withdraw funds from the PPF account.

Mandatory lock-in of 15 years is imposed on the principal amount invested in such plans. In case of emergencies related to specific end-uses, partial withdrawal can be made. However, this amount can only be extracted after the completion of 5 years of activation of the account. Up to 50% of the total balance can be withdrawn in one transaction each financial year succeeding in the 4th year.

Investors should note that funds invested in a PPF account cannot be liquidated before the completion of the maturity period. Individuals looking for long-term risk-free investment options providing stable yields can easily opt for this government-backed instrument.

Forms related to PPF

Sl. No. Form Description
1 FORM-1 Application for opening an account under National Savings Schemes
2 FORM-2 Pay-in-slip
3 FORM-3 Application for Loan/Withdrawal
4 FORM-4 Pass Book
5 FORM-5 Application for transfer of account under National Savings Scheme
6 FORM-6 Application for extension of account under National Savings Scheme
7 FORM-7 Application for pledging of account under National Small Savings Scheme
8 FORM-8 Application for premature closure of the account under National Savings Scheme
9 FORM-9 Application for the closure of the account under National Savings Scheme
10 FORM-10 Application for cancellation or variation of nomination in an account under National Savings Scheme
11 FORM-11 Application for settlement of an account of the deceased depositor by a nominee or legal heirs under National Savings Scheme
12 FORM-12 Letter of authority to open or operate an account under National Savings Schemes on behalf of depositor suffering from physical infirmity including blindness
13 FORM-13 Affidavit
14 FORM-14 Letter of disclaimer
15 FORM-15 Letter of indemnity