How PPF Works
The Public Provident Fund (PPF) is a government-backed, long-term savings scheme with tax-free returns. You can deposit between ₹500 and ₹1.5 lakh each financial year, and the balance compounds annually for a 15-year term (extendable in 5-year blocks).
PPF Maturity Formula
PPF interest is compounded once a year. Each year's deposit is added to the running balance, then interest is credited at the financial-year end — so you earn interest on your deposits and on previously earned interest.
Balanceyear = (Previous Balance + Deposit) × (1 + r)
Why PPF Is Popular
- EEE tax status — deposit qualifies for 80C, interest and maturity are tax-free.
- Government-backed — capital is fully safe.
- Disciplined long-term growth — ideal for retirement and goal-based saving.
Frequently Asked Questions
Can I withdraw before 15 years?
Partial withdrawals are allowed from the 7th year, and loans against PPF from the 3rd year. The full balance matures after 15 years.
What if I miss a yearly deposit?
You must deposit at least ₹500 per year to keep the account active; a small penalty applies to reactivate a dormant account.