PPF (Public Provident Fund) is a government-backed savings and investment scheme designed to offer long-term, risk-free returns with tax benefits. It was introduced by the Government of India in 1968 to encourage savings and provide financial security to individuals.
Benefits of a PPF Account:
- Tax Benefits:
- Contributions to the PPF account qualify for tax deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakh per financial year.
- The interest earned on the PPF balance and the maturity amount is tax-free.
- Guaranteed Returns:
- PPF offers guaranteed returns that are safe and government-backed. Unlike stocks or mutual funds, there’s no risk of losing your capital.
- Compound Interest:
- The interest on your PPF balance is compounded annually, which helps your savings grow faster over time.
- Long-Term Investment:
- PPF is ideal for long-term goals, such as retirement planning, children's education, or building wealth for the future.
- Loan and Withdrawal Options:
- You can avail a loan against your PPF balance after 3 years of account opening.
- Partial withdrawals are allowed after the 6th year of the account, providing liquidity in case of emergencies.
- Low Risk:
- PPF is government-backed, meaning the principal and interest are safe and secure. It’s ideal for risk-averse individuals who want a safe investment option.
- Flexibility:
- You have the option to invest in a lump sum or in installments (up to 12 per year).
- You can extend the tenure after 15 years if you want to continue earning tax-free interest.
- Attractive for Parents:
- PPF is an excellent choice for parents saving for their children’s education or marriage due to its long-term nature and tax benefits.
How can a PPF calculator help you?
This financial tool allows one to resolve their queries related to Public Provident Fund account. There are certain specifications that are to be abided by while calculating maturity amount after a certain point of time. It keeps a track on the growth of your capital. Those who already have a PPF savings account know that interest rates change on monthly basis.
Nowadays, it is easier to keep a check on changing rates. However, with the discovery of public provident fund calculator, account holders find it easier to find out monthly changes made in interest. In the market, you may find lot of user-friendly PPF calculators and for choosing trustworthy ones, Groww is simply the option.
Formula used for calculating PPF
uses a formula to compute the deposited amount, interest, etc. This formula has been given below –
F = P [({(1+i) ^n}-1)/i]
This formula represents the following variables –
| I | Rate of interest |
| F | Maturity of PPF |
| N | Total number of years |
| P | Annual instalments |
In order to clear your concept about PPF calculation, an example has been given. This calculation becomes easier once you buy PPF calculator.
Suppose, an individual pays an annual amount of Rs. 1,50,000 in their PPF investment for a period of 15 years at an interest rate of 7.1%, then his/her maturity sum at the closing year will be equal to Rs. 40,68,209.
