PPF (Public Provident Fund) is a long-term government-backed savings scheme with a 15-year lock-in period. Interest is compounded annually and credited at the end of each financial year. The formula calculates the future value of annual deposits with yearly compounding.

How the calculation works

A = P × ((1 + r)^n - 1) / r

Where:
A = Maturity Amount
P = Yearly Deposit
r = Annual Interest Rate (current: 7.1% ÷ 100 = 0.071)
n = Number of Years (tenure)

A quick example

Let us calculate the maturity for the maximum PPF investment:

Annual Deposit:₹1,50,000 (maximum limit)

Current PPF Rate:7.1% p.a.

Tenure:15 years

Step by step

1.Year 1: Deposit ₹1,50,000. Interest = 1,50,000 × 0.071 = ₹10,650. Balance = ₹1,60,650
2.Year 2: Deposit ₹1,50,000. Balance = 1,60,650 + 1,50,000 = ₹3,10,650. Interest = 3,10,650 × 0.071 = ₹22,056
3.This compounding continues for 15 years with the same annual deposit
4.At the end of 15 years, the total deposited amount = ₹1,50,000 × 15 = ₹22,50,000
5.Total interest earned = Final Balance - Total Deposited

So the answer is: Maturity Amount ≈ ₹40,68,250 | Total Interest ≈ ₹18,18,250 | Effective Returns: ~80%

Frequently Asked Questions

What is the current PPF interest rate?

The current PPF interest rate is 7.1% per annum (Q1 2026), compounded annually. The rate is reviewed quarterly by the government.

What is the minimum and maximum PPF deposit?

The minimum annual deposit is ₹500 and the maximum is ₹1,50,000 per financial year. Deposits can be made in lump sum or in installments.

What is the PPF lock-in period?

PPF has a fixed lock-in period of 15 years. After maturity, the account can be extended in blocks of 5 years with or without additional contributions.

Is PPF tax-free?

Yes, PPF follows EEE (Exempt-Exempt-Exempt) status. Deposits qualify for 80C deduction, interest earned is tax-free, and maturity amount is tax-free.

Can I withdraw from PPF before 15 years?

Partial withdrawal is allowed from the 7th financial year. The maximum withdrawal amount is 50% of the balance at the end of the 4th preceding year.