PPF Interest Rate 2011 and Public Provident Fund calculator

In today’s volatile conditions how many of us take the risk of investing in markets? Most of go for safe havens like Fixed Deposits but more often than not interest rate of Fixed deposits is not able to beat inflation. Read more on Interest Rate on Fixed Deposits.

Go directly to: Tax Benefits of PPF | PPF Calculator

As per government order, ppf account interest rate has been raised to 8.8%. Also the ceiling on investment under Public Provident Fund is now Rs 1,00,000.

Fixed Deposits vs Public Provident Fund

public provident fund vs fixed deposit


PPF interest rate for F.Y 2012-13 is 8.8%. In addition the interest earned is tax free is as well. So the effective rate of interest rate on Public Provident Fund is 8.8%. Now let us compare this with interest earned on Fixed Deposits.

Effective rate from fixed deposit can be calculated as : (1-TR)*ROI, where, ROI is Rate of Interest on Fixed Deposit and TR is Applicabe Tax Rate.

If you fall in the highest tax slab, you are liable to pay 30% tax on your earnings from Fixed Deposits. So even if you get a return of 9% per annum from your deposit, your effect rate of return after tax will be 0.7*9% = 6.3% only.

So as you can see hardly any other fixed income investment option gives such a risk free interest rate.

PPF Tax benefit

The amount invested in Public Provident Fund is eligible for tax deduction upto a maximum of Rs 100,000 under Section 80 C of Income Tax Act. Also the interest income earned is tax free. Hence PPF provides dual tax benefits.
If you have opened an account in the name of your spouse or minor child along with a PPF account of your own, then the amount invested in two accounts is clubbed together.

In other words, the total amount deposited in your own PPF account and the account of your minor child can’t exceed Rs 100,000 in a Financial Year.

The only disadvantage with Public Provident Fund is that the money gets locked for a period of 15 years. But that can also be turned into an advantage if you open the account early. That is, say you opened the account when you started your career. Now by the time your son or daughter are ready for marriage, your PPF account would have matured thereby providing you very useful and tax free savings.

To determine PPF returns and maturity value after different time periods use following PPF calculator.

PPF interest rate calculator

How is interest on PPF calculated in a financial year? Public Provident Fund interest calculation is a bit complicated. Interest is calculated on monthly basis but compounded on annual basis only. Also no interest is paid for a particular month if the amount is deposited after 5th of the month.

Use the calculator below to know the interest income earned from your PPF account in a financial year.

Click here to go to PPF Interest Calculator

  • Deepakkamath

    Excellent content. Thumbs up from me.