If you start an annual investment of ₹1 lakh in a PPF this Diwali, how substantial a fund will you have accumulated after 15 years?

PPF Calculation: In India, many people still prefer to invest in avenues that offer low risk and guaranteed returns—such as bank fixed deposits (FDs) or government-backed schemes. One such government scheme, which provides guaranteed returns, is the Public Provident Fund (PPF). It is a long-term, secure savings scheme backed by the Government of India. The scheme offers annual returns, with the interest rate reviewed and announced by the government on a quarterly basis. Currently, the interest rate for this scheme stands at 7.1%.

If you are planning to invest in a PPF account this Diwali, let’s look at how much your fund could grow over the next 15 years based on the current interest rate. The Public Provident Fund (PPF) has a lock-in period of 15 years, which can be extended further upon maturity.

How much will an annual investment of ₹1 lakh grow to after 15 years?
As mentioned earlier, the PPF is a government-backed small savings scheme designed for long-term wealth creation. It currently offers an annual interest rate of 7.1% and has a maturity period of 15 years.

Interest on a PPF account is calculated based on the lowest balance maintained between the 5th and the last day of each month, and it is credited to the account at the end of the financial year. This interest remains invested and continues to earn further interest. You can invest a minimum of ₹500 and a maximum of ₹1.5 lakh annually. To maximize the interest earned on your investment, it is advisable to deposit the amount by April 5th each year. Let’s see how substantial a fund you could accumulate after 15 years by investing ₹1 lakh annually.

For this calculation, we have used the SBI PPF calculator. According to this, if you invest ₹1 lakh annually for 15 years, your total investment over that period will amount to ₹15 lakh. With an interest rate of 7.1%, the total maturity amount after 15 years will be ₹2,71,214. This includes ₹1,21,214 in interest, with the remainder being your principal investment.

Tax Benefits
A PPF account is classified as an "Exempt, Exempt, Exempt" or "EEE" investment. This means it offers tax benefits at three stages. First, contributions made to a PPF account are eligible for a tax deduction under Section 80C of the Income Tax Act, up to a limit of ₹1.50 lakh per year (this applies only under the old tax regime). Second, the interest earned on PPF contributions is entirely tax-free. Third, the entire amount withdrawn from a PPF account is tax-free. Consequently, the actual return earned on a PPF investment is significantly higher.

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