Public Provident Fund (PPF) is a good investment option for those seeking a long-term risk-free retirement corpus. A PPF account can be opened at most bank and post office branches across India. PPF is a safe and tax-free option for investment, which guarantees fixed returns in the long term.

PPF is a government-backed scheme, currently offering an interest of 7.1%, which can help you create a large fund over time through compounding. The investment period in PPF is 15 years, which can be extended in blocks of 5 years each.

A minimum of Rs 500 and a maximum of Rs 1.5 lakh can be invested annually, which is tax-exempt under Old Tax Regime and is also tax-free on maturity. If a person deposits Rs 1.5 lakh every year, one can create a fund of about Rs 40 lakh in 15 years and up to Rs 1 crore in 25 years.

Therefore, it is an investment with safe and guaranteed returns, which can be beneficial for long-term financial goals such as retirement planning.

Here’s a breakdown of the returns you can expect from monthly investments of Rs 1,000, Rs 5,000, and Rs 10,000 in PPF in a post office:

PPF corpus after 15 years with an investment of Rs 1,000 per month

Annual investment: Rs 12,000

Total investment over 15 Years: Rs 1,80,000

Interest earned: Rs 1,45,457

Maturity amount: Rs 3,25,457

PPF corpus after 15 years with an investment of Rs 5000 per month

Annual investment: Rs 60,000

Total investment over 15 Years: Rs 9,00,000

Interest earned: Rs 7,27,284

Maturity amount: Rs 16,27,284

PPF corpus after 15 years with an investment of Rs 10,000 per month

Annual investment: Rs 1,20,000

Total investment over 15 Years: Rs 18,00,000

Interest earned: Rs 14,54,567

Maturity amount: Rs 32,54,567

But if someone invests annually Rs 1.5 lakh, which is the maximum limit for investment under PPF, they can make a corpus of Rs 40.68 lakh in 15 years. Of this amount, Rs 22.5 lakh is invested amount and Rs 18.18 lakh interest.

PPF rate gets reviewed quarterly by the government

These calculations give you an idea of the potential returns on your PPF investment. But, one should remember that the PPF rate keeps changing as the government reviews it every quarter. The current PPF interest rate is 7.1% for the quarter from January to March 2025.

How is the interest on PPF calculated?

The PPF interest is calculated monthly on the lowest balance in the account after the 5th of every month. The interest is compounded annually and credited to the account at the end of the financial year.

PPF Account: Open it in a bank or post office – which is the better option?

If you’re confused about where to open a PPF account—in a bank or a post office—the answer is that it doesn’t make much difference. The regulations and benefits are the same for both. So the choice depends on your convenience.

If you have a bank nearby, opening a PPF account there can be more convenient with easy online access. But if you live in a rural area or prefer a quieter, less crowded branch, a post office PPF account might be the better choice. Pick what works best for you.

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