5-Year Extension Compounding Simulator
After the standard 15-year tenure, you can extend your PPF account in 5-year blocks. See how compounding growth explodes in the extended decades:
| Tenure | Invested | Maturity | Extra Interest |
|---|
Worked Example: Public Provident Fund Growth
Suppose you deposit the maximum limit of ₹1,500,000 per year (₹12,500/mo) in a PPF account at the current interest rate of 7.1% p.a. for the standard lock-in period of 15 years:
- Total principal invested = ₹22,50,000
- Estimated interest earned = ₹18,18,209
- Maturity value (tax-exempt) = ₹40,68,209
Your PPF investment yields a tax-free maturity corpus of ₹40.68 Lakhs at the end of 15 years.
PPF Compounding Formulas
Interest in PPF is calculated on the minimum balance between the 5th and the end of the month, but it is compounded annually at the end of each year. The maturity amount for annual contributions is given as:
Where:
- F = Maturity value of PPF
- P = Annual contribution amount
- r = Annual interest rate
- n = Total number of years (usually 15)
Note: This formula assumes that the contribution is made as a lump sum at the beginning of the financial year (before April 5th), which maximizes interest earnings.
Annual PPF Growth Projection Schedule
| Year | Opening Balance | Contribution | Interest Earned | Closing Balance |
|---|
Frequently Asked Questions
Yes. PPF falls under the Exempt-Exempt-Exempt (EEE) tax category in India. This means that: 1) Your annual contribution is tax-exempt under Section 80C, 2) The interest earned annually is tax-free, and 3) The entire maturity amount is tax-free at withdrawal.
Partial withdrawals are permitted from the 7th financial year of opening. You can withdraw up to 50% of the balance at the end of the 4th preceding year or 50% of the balance at the end of the preceding year, whichever is lower. Premature closure is allowed after 5 years under extreme medical or educational emergencies.