Many of us have PPF account. But we fail to understand the simple tricks like when to invest in PPF to get higher returns. Today I am going to share with you one simple thing about PPF which you might not noticed during the opening of your PPF account.

Interest for a particular month is calculated on the lowest balance between the close of the fifth day and the end of the month. This accrued interest will be credited to the account at the end of each year. It means if you want to have a benefit you need to invest your monthly contribution within the fifth of every month. Else, your contributed amount will be eligible for gaining interest for the next month. Therefore, if you contribute after fifth of the month then for one month that amount will be idle.

I will show you with illustration that how you can maximize your returns by simply following the above condition of interest calculation.

Suppose Mr.X and Mr.Y opened PPF account on same day and started to contribute Rs.8,000 each month but Mr.X is contributing before 5th and Mr.Y is contributing after 5th of each month then how much difference we can see.

Mr.X’s Accumulation after 15 years.

First Year Contribution is Rs.8000 PM.

1st Month Contribution-8,000+688 (interest for 12 months) =8688

2nd month Contribution-8,000+631 (Interest for 11 months) =8631

Like this at the end of 1st year Principal is (8000*12) + (4472) =1,00,472. The same amount will be his contribution for the remaining 14 years. So, at the end of the 15th year, his accumulated amount is Rs.25,39,929.

Mr.Y’s Accumulation after 15 years.

First Year Contribution is Rs.8000 PM. (But after 5th of each month)

1st Month Contribution-8,000+630 (Interest for 11 Months) =8630

2nd Month Contribution-8,000+573 (Interest for 10 Months) =8,573

Like this at the end of 1st year Principal is (8000*12) + (3,784) =99,784. The same amount will be his contribution for the remaining 14 years. So, at the end of the 15th year his accumulated amount is Rs.25,22,536

The difference of returns between Mr.X and Mr.Y is-Rs.17,393.

But you may say, what is the time value of this difference after 15 years?

It may be your one month’s household expenses what you are paying now. How is it?

Suppose today you have some household expenses Rs.7,257 PM then the future value of that will be Rs.17,393. (Inflation-6% Tenure-15 yrs).

Therefore, what I mean to say is, with simply following your monthly contribution before the fifth of every month you can get higher returns. Hope this point may add value to your saving 🙂

## 230 Responses

Dear Sir

I an earning and deposit 1.5L in my PPF

My wife also earns and deposits 1.5L in her PPF. We both get 80c deduction on our contribution in our accounts.

Can I deposit 1.5L to her account? and will she get interest on that amount? I understand that I wont get any 5ax deduction on this additionaln1.5L

Similarly can she deposit 1.5L to my account? Will i get interest on that additional 1.5L also?

Kindly reply and oblige

Please advise if I open PPF acct on 10th feb 2023 and deposit 1.5 lakh. Will I be able to deposit 1.5 lakh in the month of April 2023. Will it be beneficial or not.

Dear Vinod,

Yes, you can do so. Beneficial or not depends on your financial life.

I opened my ppf on dec 2021 and i made lumpsum deposit of 1.5 lkhs during 24 -28 march 2022 . Its april mid still im not getting any interest reflecting in my account. Will i get inetrest for the whole 2020-2021 fy or ill loose some of it

Dear Sanish,

As you deposited after 5th of March, the interest will start to earn from April.

I had opened ppf account in 2013, but as per today I have only 2 lac in that account. The maturity year is 2028, should I invest 50 k per year to get maximum return or should I invest this amount in sip or try some other options.

Dear Raj,

Invest as per your comfort and investment purposes rather than BLINDLY.

What if I invest sum total of 150000 lakhs before 5 April in Financial year in one go then the monthly contribution ?

Will it make a difference ?

Dear Nitesh,

If you invest Rs.1.5 lakh before 5th of April, then it will be beneficial as it starts to earn the interest rate from the day one itself.

I opened ppf account on may 2021 then maturity year will be 2037 I deposited 150000. Should I have to deposit for 16 yrs ? Or stop deposit on 2036? How they calculate interest? I’m really confused

Dear Paul,

You can invest up to 31st March 2037.

Monthly investment is beneficial or lumpum amt is beneficial in ppf

Dear Nishu,

Invest which is comfortable for you.

Hi sir,

if I made first month deposit on 17th April, can i make next deposit on or before 5th of the next month i.e. May before 5th? or should i wait for completion of 30 days?

Dear Chandana,

Why to wait?????

Dear Sir,

I want to invest lump sum(1,50,000) amount in PPF and missed the April 1-April 5, 2021 duration. If I open the account on May 1st, 2021 and invest the same amount, can you help me determine the amount I will lose at the end of 15 yrs years for not opening the account on April 1st, 2021. Where can I find the formula for this calculation?

Thank you.

Dear Santosh,

Calculate on your own. I can’t do calculations for each individual. However, losing one month’s interest on your Rs.1.5 lakh is too small and you can’t recover it. Hence, rather than scratching your head too much on such issues, start PPF and invest NOW.

Thank you Sir.

Hi Sir! I created my PPF account on March 1, 2021 and deposited Rs.10,000 in it. Since I didn’t know that the interest rates are calculated for FY 2020-21, I couldn’t deposit the rest of the amount (Rs.1,40,000) in it before March 31, 2021. So for the first FY, the interest rate will be calculated only for Rs.10,000 right? Is there any way I can deposit the remaining amount now for the last FY?

Dear Srrayvinya,

So for the first FY, the interest rate will be calculated only for Rs.10,000 right? – YES

Is there any way I can deposit the remaining amount now for the last FY? – NO.

Dear,

I have opened PPF account on Jun 2019. I paid 1.5 Lakhs on Jun 2020 as well. It means I already paid for financial year 2020-2021. Then today April 10 2021. I opened my account and it is still saying payment is done for the current financial year. But I have not paid anything for the financial year 2021-2022. If I pay now then Will it be added to the financial year 2021-2022. Thanks for your answer.

Dear Anand,

I think your bank or post office not updated the system. Check with them before investing further.

Hi sir,

I want to open PPF account but its already 6th April today. Do I need to wait until next year to open PPF in between April 1st to 5th or can I do it in the next month i.e., in between May 1st to 5th. Please suggest me , I am confused.

Dear Keerthi,

You can open NOW also.

Hello Sir,

If I deposit the amount exactly on the 5th of the month, will I be getting interest for that month or not.

Basically, should the deposit be before 5th of the month or even on 5th of the month would get the credit of interest or not?

Regards,

Sandy

Dear Sandhya,

It should be on or before 5th. Hence, you can deposit on 5th also.

Hi Sir,

Thanku for the article, that was helpful. Had a query, I’m planning to invest in ppf starting this year and yet to open the account with SBI, can I deposit lump sum of Rs. 150000 between 1-5th may, 2021 since April 5th will not be possible.

Dear Prarthana,

Yes.

Hello,

I had a small doubt regarding interest. If I invest 1.5lac lump sum I.e between 1st april to 5th april or if I pay 1.5 lac partly in every month I.e 12500pm will it effect my interest?

Or at the end of FY my interest will be same by both the method. What is more beneficial?

Thanks in advance ?

Dear Priyanka,

Among the three, investing before 5th of April is more beneficial.

I opened ppf account in feb 2021 with 1.5 lakh as deposit … As now its april 2021 and am trying to deposit for this fiscal year its not accepting payment on this date of 1st april 2021

You can try now, its accepting the funds in PPF account.

Dear Bhosale,

You can invet now. If not, then it is a software issue with the bank.

Good Morning Sir; My name is Kushal Kisan Shelke.I have open my PPF account on 17/08/2020 and make a contribution of Rs.1.5lakh between 01/09/2020 to 05/09/2020 but on 1/04/2021 I was not receive or credit any interest in my PPF account yet?

Dear Kushal,

Wait for them to update.

Sir, i have opened my PPF account on 17 feb 2021 with ?1000. I have not submitted any amount. I am thinking of depositing an yearly amount ? 24000. Should I do it till 31 march Or between 1-5 April? Will my 1 year complete on 31 march 2021? I have not submitted any amount in my PPF till now.

Dear Rozy,

You can either deposit today or tomorrow also. One year deposit restriction is always based on FY.

Sir if I invest 1.5 lakhs before 31st March then can I invest 1.5 lakhs more next month in April as financial Year will change?

Dear Deepak,

Yes.

Sir, will I get an interest benefit on 1.5 lakh if I open an account today (15th March’20). Please suggest. Much Thanks

Dear Sonu,

If you open an account today, then the interest will start to earn from the next month.

Dear Sir,

Thank you for your advice.

I have opened the PPF a/c in HDFC bank and it has opened under their home branch which is in Anna Nagar, Chennai. Should I transfer the account to the Mumbai branch where I stay or is it okay to continue with their home branch?

Dear Sonu,

Their default PPF account branch is Chennai. As you opened it online, you no need to worry.

Dear Sir,

I want to open a PPF account. Should I open now or wait for April 1-5? If I open in towards end of March will I get any benefit.

Dear Sonu,

If you open on or after 1st April 2021, then it will mature on 31st March 2037. If you open the account before 31st March 2021, then it will mature on 31st March 2036.

Sir,

I am a Government Servant.I made contributions of 1,50,000 in the GPF account. And also an amount of Rs. 1,50,000 in PPF account of my daughter(minor) for the previous financial year 2020-2021..As per the income tax for the FY 2021-22, contribution towards PPF in excess of 2,50,000 is taxable. Will both accounts( self and daughters) be combined for tax calculation. If so, can I open an PPF account my wifes name who is an housewife and claim the interest free tax. please advice..

Dear Shridhar,

The rule you are mentioning is about EPF but not about PPF.

Sir, i want to start investing in ppf account. So should I start investing within march 2021 (between 6th march and 31st march) or should i invest in april 2021 (before 5th april) to get maximum benefit? I want to invest 20,000 lump sum and 1000 monthly.

Dear Rahul,

Invest from TODAY.

Thank u sir for such informative post. Sir I I open ppf account on 26 Feb 2021 with 1lakh is I get intrest of FY 20-21 or only march. Is that time is suitable to gain maximum intrest.please help me

Dear Deepak,

You will earn the interest from March.

My PFF account is going to mature in 2023. Please guide me whether it’s beneficial for me to invest huge amount in my PFF account or in my wife PPF account opened in 2009. Which will attract more interest?

Dear Pradeep,

You can’t deposit the HUGE money (Beyond Rs.1,50,000 a year) and both the PPF accounts earn the same interest rates.

Dear Sir,

If i opened Ppf account in Feb 1st,2021 and deposited certain amount on same day, will interest be generated for that amount in for Feb & March of 2021? Even though the financial year calculation starts from April 1st, 2021.

Dear Murali,

You will earn the interest from Feb and March.

Hello sir. I just opened a ppf account today and deposited 1000 rs, i want to invest 1.5 lakhs per year. So should i deposit the remaining amount within what period and when should I deposit the next premium. Could you kindly advise. Thank you.

Dear John,

I have already replied to your message.

Hi Basu,

Good and very informative article.

I have a PPF account in my name and i deposit 1.5 lacs every year in the month of April. Can i open a PPF account in my wife’s name (she is non earning) and deposit 1.5 lacs per year in her PPF account ? is it permissible under PPF laws ?

I understand i can claim tax benefit for 1.5 lacs only

Dear Sanjeev,

Yes, you can do so. But do you need this much of investment in debt products for your long term goals?

Please let me know how can i discuss the investment in detail.

Sir

I have a PPF Account in SBI Linking Road Branch for 15 years.Every year on the 2nd April i deposit 1.50 lacs into my account.I have completed KYC and submitted FROM H at your branch personally

Today i made online transfer of 1.50 lacs and i got a SMS saying that my account has Matrured.

What can i do as this is my MAIN Sourcce of Retirment. I wish to keep on continuing payments every year. Since the employee has not done his job does it mean that my PPF account is closed. Cant i again fill Form H and renuew it

Dear Arjun,

When it is matured actually? on 1st April 2019 or 1st April 2020?

Can i invest 1.5L in SSY scheme and 1.5L in PPF scheme for my daughter ?

Dear Ram,

Yes.

Sir am going to invest 1.5 L in end of March so will I get interest for whole year or only one month if so can I invest in April

Dear Poonamsharma,

Only for a month.

Sir,

Kindly clarify:

I opened PPF account on 30.03.2019 & deposited 1.5 Lac on the same day. And again I deposited 1.5 Lac on 03.05.2019. Will I get interest for entire 3 lacs . Is the 1.5 Lac limit for financial year or Annual difference should be 1 year??

Dear Ravi,

Your first deposit falls under FY 2018-19. Second deposit falls under FY 2019-20. Hence, you will be eligible for the interest on all the Rs.3 lakh.

This article is superb.

Thank, Sir. It is a very good article. However, I want to say something about the maximum gaining option from PPF. If I invest total amount i.e. Rs. 150000 at a time (if possible) before 5th April of a financial year, then I think the return will be the maximum. What is your opinion?

Dear Avishek,

This is what I said in the above post.

hi Sir

Can i open a PPF account between May1 st-5th 2021 and opt to deposit 50k on the same day, and another 50k within this year end , will I still be eligible for maximum benefit?

Also if i deposit 1 lakh this year, is it necessary that the amount is fixed for all the 15 years I pay or can i pay 1.5 lakh next year, 50k the year after so on depending on my financial situations.

TIA

Vini

Dear Vini,

Yes, you get the benefit and you can deposit in a flexible way.

I Have doubt, whether i can invest various amount in each month in FY. i.e one month Rs.5000, next month Rs.3000. in a same FY.

For 1st year, My total investment will be 80000, Can i invest 100000 from 2nd year.

Dear Sakthi,

Yes you can do so.

Hi

I hav opened ppf account in Feb 2019 with a deposit of 5000…..now I want to deposit 1lac…..shd I deposit it in Feb or April?

Please advice

Dear Mec,

You can either invest in this FY (before 31st March) or in next FY also (After April).

Just one clarification. After 15 years if i extend my account, will i still get the 80c benefit. Also will my interest during the extended period be tax free.

Sulagna

Dear Sulagna,

For your both questions the answer is YES.

Hello Basu,

Is it advisable to pay the PPF amount in lumpsum in one shot? Can you please confirm the calculations if Mr. X paid Rs 60,000 before the 5th of January in 2019?

Regards,

Dear Amit,

It is beneficial if you pay it in one lump sum before 5th of April every year.

Hi,

I have monthly installments for my ppf account(so, it comes to 12 installments for a year). If I would like to invest more, then should I invest lumpsum or increase monthly installment? We are only allowed to make 12 installments in an year.

Consfused. Please clarify.

Thanks

Dear Shrilok,

You can invest as per your wish but make sure that you must not cross the maximum limit.

Nice explanations Sir…

Sir

I am investing 4000 a month and want to invest 4000/month or 50000 a year more

What should I opt

Ppf or any other insurance

My age is 25

Dear Amit,

Without knowing your financial life, it is hard for me to suggest where you can invest.

So you can advise me sir

Dear Amit,

Without knowing your full financial life, I can’t suggest anything BLINDLY.

Hi, does it make sense to invest maximum money possible in initial few years (let’s say 4-5 years) of PPF? I ask this because of the long compounding that will happen on money invested in initial few years. For example, money deposited in first year will be compounded over 14 years!! At 8.7% earnings, my calculations say the effect of this compounding on money deposited in 1st year would be an annualized 16-17% at maturity!! Is this true? And similarly, the money deposited in 2nd year, 3rd year and so on will have dwindling annualized returns but still healthy around 14-15% annualized rates. Wish to know your comments on this

Dear Gursharan,

Whether it is PPF or any other instrument, to enjoy the compounding you have to invest more and you have to wait for long term. In compounding formula, only two things are under your control i.e. N and P. Hence, maximize these two at your end.

Hello Sir ,

I want to open my ppf account and invest yearly basics since its already 18th September 2018 , could you please suggest me should I open account and start investing from between 1-5th October 2018 or should I wait till April 2019 and invest lum-sum amount then?

You should start an account and investment as early as possible. In this way you will get more benefit from compounding of interest.

Hi do u have any idea about provident fund ..

I mean i work at acompany for around 2.8 years now i join a new company i transfer my old pf to new pf accounts,the pf amout got transfer but my pension amout not transfer can i know why??

Harshad-EPS will never get transferred. EPFO just update your service records. Hence, you no need to worry.

So at the time of my retirement will i get the pension amout of last company also

But where can i get to see the amout of total pension

Harshad-YES.

Is there site where i can see my pension amount just like my pf amount??

Harshad-No other site than checking your own EPF Passbook online.

Hi Basu,

Thanks for the wonderfully explained article.

I have a question:

I currently have a PPF A/C and try my best to deposit the maximum threshold every year.

I want to maximize my investment by opening a PPF AC for my father (senior citizen with pension).

This is just to maximize/ double the investment and not to aid to my 80C contribution.

I know opening an AC for my father will not be any problem as he is a major. But my question is, I will be the sole contributor in the new AC. Can I do that to maximize my investment?

Thanks,

Arghya

Arghya-Yes.

Sir,I m a privet school teacher ..n I wan to open a PPF acount …but it’s 28 of July …so can I open it in august befor5th( monthly) or I should wait for 1st April ( lump-sum) as I HV an insurance policy whose premium I HV to pay on 5th august so it is quite difficult for me to pay to premium with on a gap of 2-3 days…

Priyanka-OPEN NOW. Such difference is not high and waiting for this will again harm you of what you already did a mistake like not investing earlier.

Dear Sir,

Kindly clarify my doubts regarding PPF account opening.

Since I have missed the start of this financial year 2017-2018 by 4 months already. Should I wait till April 2018 for opening PPF account or should I do it in September 2017 ?. I am planning to invest 1.5 lacs annually every year. Kindy guide what would be the best option/way to do it in terms of obtaining maximum interest benefits for lumsum annual investment in PPF account. Whether to wait till April 2018 or open it in September 2017 ?

Am totally confused.

Thanks and Regards.

Aashir-Opening it TODAY is the BEST option.

Hi Basavaraj,

Since April 5 has already passed, should I invest 1.5 lac in one shot before the 5th of any upcoming month or should i put in the money every month before the 5th.

Thanks in advance.

Mamta-You can do lump sum before 5th of May also (if you can afford). Otherwise, stick to monthly investment.

Dear sir

Presently my age is 25,i am planning to open the PPF Account on feb 04 2017 can you plz tell me what will be my maturity date

Harshad-1st April, 2032.

Which one is better to earn more from PPF Account Monthly contribution or Annual contribution.

Harshad-Annual contribution before 5th of April every year will fetch you more than monthly contribution.

HI Sir

IF a open a new account in may (1-5th)2021 and for the 2nd year and the following years if I invest between april 1-5th of every other year, will i still get maximum earrings still out of this?

Dear Ishara,

Yes.

My PPF account will mature in the month of Feb 2016. Now my question is

1. How much %age of amount i can withdraw after completion of 15 years and i don’t want to close my PPF account i.e. i want to extend till 05 more years.Is there any provision ?

2.SBI bank manager told me he is not aware about the rule of withdraw limit after the completion of 15 years with extension of 05 years.

3.Kindly suggest me best solution

Krishan-Refer my earlier post “PPF withdrawal rules & options after 15 years maturity“.

how many times I can renew my PPF account?

After 15 years, will I be able to withdraw my matured amount in any proportion at any time ?

I am thinking of buying home after 15 years, is it advisable to accumulate amount in ppf account ?

Jay-You can extend as long as you can. Withdrawal rules are explained above. Please go through it. PPF suffice to reach the goal or not depends on what is your goal amount, how much you contribute and what will be the inflation of that goal after 15 years. Hence, I can say anything on that.

Dear Mr.Basu,

I have opened a PPF account on my daughter’s name (Minor). But the time account matures, she will be a major. While closing the account, can the parent withdraw the amount or only my daughter can. Please clarify.

Regards,

Sai

Sai-Only daughter can withdraw it as at that time she will be major.

She is US born. I was just worried if she could withdraw the amount without any hassle post maturity.

Or would you suggest me changing the account holder name ? Please suggest, Mr.Basu.

Sai-If she is US born, then she might be foreign residents when opening account right? Sadly you can’t change the account names.

Mr.Basu – By the time I had opened the account on her name, we have moved back to India. We have her PIO (Person of Indian origin) card too.

So does this help ?

(PS: She is simply US born. So she is US citizen by birth. We will reside in India forever. So i assume this shouldn’t be a problem.)

By the way, while closing the account & drawing the money, what is the list of documents she might have to furnish ? Please clarify

Regards,

Sai

Sai-Then no issues. But while she attains the age of 18, then you have to inform to Bank or Post where you opened the account that she attained majority by providing her age proof and other KYC documents. Then it will turn her account.

India is evolving fastly into online mode. Hence, as of now physical presence is required. But don’t know the future after 15 years.

Thank you so much. Such a valuable conversation.

Will surely knock your door in case of any queries.

Regards,

Sai

SIR, I WANT TO KNOW ABOUT MORE THAN SALARY OF RS. 15000/- PER MONTH, AND WANT TO CONTRIBUTE THE EPF ON MY PRESENT SALARY I.E. RS.70000/- PER MONTH, THE CONTRIBUTION OF COMING RS.8400/- PER MONTH. I.E. (EPF 8400+EPS 1250/- TOTAL COMES TO RS.15550/- ON ACCOUNT OF EPF. ON BOTH CONTRIBUTION (EMPLOYEE AND EMPLOYER).

KINDLY INTIMATE ME IS IT POSSIBLE OR NOT. AND WHAT TYPES OF PROBLEMS MAY BE FACED IN FUTURE.

THANKS SIR.

Inder-It is possible if your employer also ready to contribute on your salary (Basic+DA).

Sir … my question — when we get more benefit(interest) if we invest on monthly wise before 5th of every month or lump sum amount for the whole year in April 1 to 5.

Kumar-Lump sum between 1-5th of April.

Thank you so much for clarifying my doubt.

If I Open account in May between 1 to 5

Will I loose some benefit I case I would have opened it in April 1-5

How much will I be actually loosing on the interest part and Tax part

Also do the same rule apply for Sukanya Samriddhi Account

S-For tax part, there is no difference. However, if you deposited between April 1-5th than May 1-5, then you lost one month interest on your money.

Does this loss apply to lump sum or even monthly paying if I start from May 16

Thanks in advance to bear with my amateur questions

Sachin-It applies to both.

sir is PPF really a good option? because till 15yrs or atleast 7yrs we cant take a single penny out of it right? money which cant be used at the time of emergency also is of wat use later? so i doubt if its good. pls let me know wat advantage it has

Guru-If it matches your financial goal, then it is BEST. Otherwise WORST.

Sir i opened an PPf account with 70000 by 2012 for tax exemption but dint know i have to pay every year. in 2014 i knew it and started paying 500 every year. so will there be any problem at the time of maturity? i think my account is still active as i get interest every year. may be that interest is considered as a deposit? if so then i dont want to put 500 every year right? and also after 15 yrs ill get the 70000 with the interest but what about the 500 that i pay every year? can i take out that also or i have to wait for 15yrs from date of deposit of the 500? hope my query is clear:) and cant we withdraw the interest alone from PPF (like in FD)??

Guru-There is no problem at maturity due to high and low payment in PPF. You are again wrong, crediting interest not means your account is active. It will be active only when you deposit the minimum amount. Regarding withdrawal of Rs.70,000, refer my earlier post “PPF-Loan and Withdrawal“.

sir i did not find answers for my question in the above link. so pls clarify me again..

u mean to say that there is no problem at maturity? the left out two years are ok? later i have to pa penalty for it? if so how much? and as i asked when can we withdraw that 500 per year payment? it also needs 15yrs?

Guru-If you thought to invest, then you have to pay the penalty and activate it. Otherwise, no need to activate and there will not be any effect at maturity or return part. Regarding withdrawal eligibility, refer above post.

While opening PPF account ,if i start Lump sum investment starting April 16 (max i.e 1.5 Lac )

For consecutive years to come ,do i need to continue this or i have option for less amount and monthly instead of Lump sump etc

Kindly advice

Sachin-In consecutive years, you are flexible to deposit as per your wish.

For me, Best time in year to pay PPF in single shot is the first week of April, where on 5th April the interest calculated on total amount and fiscal starts at first, so double benefit as I started the PF on april…. it is 14 year than 15 actaully

Nobody-I said the same thing and nice to hear of you about following it.

Sir,

1) I am yet to open a PPF account. Is it advisable to open it now, in the month of March’16, or is it better to open in April ’16.

2) I have already met my 80C commitments for the current 15-16 FY. So will opening the account in March’16 have any advantage?

Thanks in advance for your help.

Badri-1) NOW.

2) You have to invest for your financial goals but not ONLY for tax saving.

Sir I want to open a ppf account in united bank.

1.Is it valuable to open in January or should I wait it for April 1st, 2016 for higher returns?

2. say I have deposited 1000 in the month of Januaryand the lumpsum amount in April, 2016, will I be at a loss?

Please guide how to make the investment

Madhur-1) Start now. Why you want to waste for 3 more months?

2) No..How?

Suppose I want to invest 24000 per year in ppf.

How will I earn more interest-

whether by investing the whole money at a time?

Or by investing 2000 per month for 12 months?

Or both the interest accrued will be same?

Nihar-You earn more by investing lump sum between April 1st to 5th than any other options.

Hi Mr. Basu,

Great Post.. very informative!

Just want to know one thing – I generally make two deposits in PPF – 1Lakh in Dec month (10th Dec) and 50,000/- in Mar (10th Mar)

Que 1: How is the interest calculated in my case?

Que 2: Could you please show (using the calculations) the benefit that I could have received if I had deposited the entire amount of 1,50,000/- in Apr as lum sum.

Suchitra-1) December and March deposits will be considered for calculation from Jan and April respectively.

2) If you deposited the same in the month of April, then the interest will start to accrue from April month itself (if you deposited within 5th, otherwise from May).

I explained how the interest is calcualted. Also, cleared your doubts. Hope this much is enough.

I have a PPF Account in my name from last 6years & i am getting benefit U/S 80C of Income Tax every year.

Now I want to know that can i open 3 new ppf accounts in the name of my Wife & 2 minor son and i will deposit amount in these 3 accounts, but not claim rebate U/S 80C.

The interest earned in these accounts of my wife & two minor son will be treated as my income or will also be tax free.

Vijay-You can open in their name. But do you feel such over investment in single product worth?

I want to open a PPF account, kindly suggest should i invest lump sum amount or monthly installment basis?

Nitin-It is purely based on your convenient. If you want to invest lump sum better to invest within 1st to 5th of April every year. If monthly then within 1st or 5th of every month.

Sir I want to ask whatever money we invest to EPF can we get income Tax Rebate on that under.80c

thanks

Gaurav-Only the employee contribution is eligible for deduction under Sec.80C.

What difference will it be if the Mr. X is depositing 8000 P.M. while Mr. Y is depositing the whole amount 8000 x 12 = 96000 once at the starting of the financial year??

Saugata-You can calculate the same by using the simple above method.

Informative topic !!

Bank used to do the same earlier while calculating interest rate on saving.

Hello Basu

Thanks for clearing my myth, I recently opened a PPF account with ICICI bank and for year 2014-15 i invested 150000, however as i was not aware of the calculation i kept the money in the savings account and deposited only in the month of march. This is am eye opener for me for the remaining years Thanks

I have one more query, work in a private company and my epf contribution gets deducted, the company also gives the facility to invest in NPS under section 80 CD(not sure if i wrote the correct section), normally which i was told the max from this route i can invest upto 10% of my basic and get a tax benefit over and above 80c. As per the new tax law does it mean i can invest 10% of basic +50000 in nps which mean i can get more benefits fro 80 CD, please let me know if this is correct and does this make sense. I fall under the 30% slab.

Amit-Regarding NPS changes, please refer my earlier post “Budget 2015-20 Changes that affect your Personal Finance“.

sir,which wold be better birla sun life mnc fund or uti mnc fund?is this right to invest in mnc funds now?

Shivam-May I know your logic in selecting sector theme like MNC?

sir,there are three reason that made me to think to invest in mnc fund.FIRST-they have performed little much better than leading funds of their category like reliance tax saver,axis long term equity in tax planing ,franklin india high growth companies fund in multicap,franklin india smaller companies fund in mid snd smaller cap category in 5year time period.SECOND-they invest in high quality and well managed famous companies.THIRD-according to website of crisil both funds are consisting performer.

i was doubtful as i heard a news recently that sebi has softened the delisting norms for mnc companies as it can effect the diversification quality of fund.but global companies are eager to come and to listing in indian market.

as my view is of long term should i go for invest in a muticap fund and a small and midcap fund or go for a multicap and a mnc fund?

Shivam-Performance in sense since how long? Is one year, two years, three years or five years? Look for long term history but not short term. High quality well managed companies are also their in India (I am not underestimating your research, but making you to diversify than concentrating on any one theme or sector). My suggestion is to have midcap fund and multicap than mnc fund.

OK SIR,giving first priority to diversification quality instead of return, i would go for investment as your suggestion

Hi sir,

How much percent of my income should I contribute towards ppf for a safe play.I’m 30 yrs old.can you pls suggest sir.

Amar-It depends on your finance and goals. How can I say?

Hi,

I have a question, i opened PPF account with 1500 rs PM i.e( 18000) PA.. Can I increase that amount to 3000 PM i.e. (36000) PA.. Or there are any restriction on increasing the amount.

Hirdesh-There is no such restriction. You can go ahead.

I have opened the PPF account in the year of 2009. Till date I am investing on Yearly basis, that is once in a year ( in the month of December or January ) also my amount of investment is not fix. But now I want to fix the amount of investment per year . Please advice me when should I invest to get the maximum returns.( I have gone trough the above mentioned Example of Mr.X and Mr.Y) Also please let me know that should i follow the monthly investment or yearly one time investment is ok . Which investment will give me good returns Monthly OR Yearly? If yearly then in which month I should invest in my account.

Nikhil-If you want to invest lump sum then invest before 1st to 5th of April. If monthly then opt for each month investment within 1st to 5th.

I have opened ppf account recently July 31, 2014 .

q1. What is the start date of my ppf account whether July 31,2014 (or) April 1,2015?

q2. if July 31,2014 is start date means, end date of ppf account is July 31,2029 but actual end date is March 31, 2030 some article said. if it is true means , can i invest in between July 31,2029 and March 31,2030 without using extending five year rule(Note:Actual end date March 31, 2030 but July 31,2029 itself fifteen years going to complete right).But it exceeds more than 15 years

q3. I have opened account only August 31, 2014. How many installment can i use in the financial year 2014-2015(from July 31,2014-March 31,2014).

q4. Can i get interest for months from July 31,2014 to March 31,2015?

Harish-Your start date is 31st July 2014. Yes you can invest till 31st March 20130 as investment in PPF is fixed on financial year base rather than your account start date. Typically PPF is more than 15 years product rather than theoretical way of saying 15 years product. You can use maximum 12 installments, irrespective of when you opened. Because as I said earlier investment will be considered based on financial year. Regarding interest calculation, yes you get it but go through above post to understand how interest is calculated in PPF.

Thanks a lot ,for interest calculation , If i understood correct means

My monthly contribution rs.1500

for first month interest calculation : 1500 * 8.7/100 = 130 .5(12 month interest) but i have started on account july 31,2014 . So from july 31,2014 to March 31,2015(current financial year) totally 8 month .

then 1500 * 8.7/100 = 130 .5/12 * 8 = Rs.87(8 month interest) interest only first month investment.

and remaining month interest calculated by reducing one,two,three,etc from 8 month

ie.2nd month 130 .5/12 * 7 = 76.12(7month interest)

3rd month 130 .5/12 * 6 = 65.25(6month interest)

Harish-Yes you are on right track 🙂

I need some clarification interest calculation on PPF

My monthly contribution is rs.1000 ie. yearly 12000 then interest rate as 8.7% for current financial year.

interest = 12000 * 8 .7 /100 = 1044 (First year completion) ie 1044 / 12 = 87 per month

Then Second year starting .Principle amount now is = first year contribution + interest that is = 12000 + 1044 = 13044

In second year interest calculation and third year principle:

Third year starting principle = principle when first year completion + second year contribution + second year interest

= 13044 + 12000 + (( 25044 * 8.7/100) /12) * 11 (interest only for 11 month that is divide by 12 get one month interest then multiply by 11 for 11 month interest)

= 25044 + 1997 = 27222.

Am i correct or wrong ?, In the above article interest is reduced year by year if the person paying amount before date of 5th of the month. or did i understand i wrong way?

Harish-No it is not like that. Your first month contribution of Rs.1,000 will earn the interest for whole 12 months whereas second month installment will earn 11 month interest and the same will continue for the rest of the installments. That too if you invest every month within 5th . Now the calculation of first installment will be (Rs.1,000*8.7/100)=Rs.87 (earns 12 months interest)and second installment have interest calculation like (Rs.1,000*8.7/100)=Rs.87/12=Rs.7.25*11 months=Rs.79.75 (earns only 11 months interest) so on for the next months installments. Such accumulated interest+principal will be next year’s principal for 12 months. Rest monthly contribution calculation will continue as said above. So it is not plain calculation, your each month interest will earn according to the month wise.

Thank you . Now i understood the interest calculation, Thanks a lots again

Hi basu,

Q1.

In above reply you said first year accumulated interest will be added to the second year principle for 12 month

which means for example if my first year accumulated interest is rs.1000 then In second year each month principle is (firstyear accumulated interest/12)+second year monthly contribution = (1000/12) + 1000(i considered my second year monthly contribution)

Q2. ppf minimum deposit should be per month is 500 that is rs.6000 per year , max is rs.8333 per month (because yearly limit is rs.10000). what my question is, can i deposit first month rs.6000 then i stop deposit for one year

then second year rs.6000 then stop for one year? now my assumption is 6000/12 = 500 which satisfy the minimum deposit per month but i paid as lump sum in every year starting as 6000. is this possible or will it affect any interest rate or any terms and condition violation of ppf scheme? or is it mandatory to pay all the month instead lump amount

Harish-Why so confusing for you. Separate the first year accumulated principal+interest. This amount will earn straight away 8.7% from beginning of month to March 31. Rest of your second year contribution will follow the interest calculation method as of first year. That’s it. If you are planning for lump sum investment then it is always best to invest between 1st to 5th of April. If you do so then it will be considered for interest calculation from the April month itself. So you have an edge of earning more than monthly investment.

Thanks a lot , Now its clear , I am grateful to you spending your valuable time for clearing my doubts…

My monthly contribution 3000 per month ,Now i cant afford to pay this amount consistently.

Q1. Can i Contribute 500 for next month ,1500 for next of next, 1000, 3000 ,500, 0(Note:no contribution in any one of the month not year),then 4000, 3000 next next month in an financial year? That is varies amount in each month but it wont exceed more than 1Lakh in an year , I am aware on that.

Q2.What will happen if i forgot to contribute for one month ?: Note: Not one year just one month. will have any terms and condition violation?. or do i want get legal permission from the branch which i maintain my account?

Q3. Is their online banking facility for ppf account?

Q4. Is it compulsory to enter the transaction info in the passbook ? somebody mention in order to avoid tax need to entire in the bank passbook

Harish-

1) Yes you are right and you can do so.

2) Nothing will happen if you forget a month. So don’t worry 🙂

3) Few banks provide such facilities like ICICI, IDBI or SBI. So check with them.

4) Yes it is best practice to enter it in passbook for taxation as well as for your reference purpose.

For detailed view about this product, you can visit my post “All about Public Provident Fund (PPF)“.

I have gone through your link , it is great and i have two question

1.Do i need to enter in passbook if i have online statement of ppf account to

avoid tax ?(Note: I have ppf account and normal saving account with netbanking facility in sbi)

2.Can i make more than one deposit in a month ?(Note: Number of installment only 12 mentioned in your link.it means only 12 deposit(installment) i can make in one year)

Harish-If you have online passbook of PPF then no need to have physical one. Yes you are very much free to increase the frequency of investment within a month also.

Great Job 🙂 keep posting articles like this

Rakesh-Pleasure 🙂

Sir,

Will it be a good idea to do a recurring deposit at the end of march in a bank and put the whole money in PPF within 5th of April?

Regards,

Pinaki

And also give me an idea about NPS. I am working in public sector bank.

Regards

Pinaki-Do you have mandatory NPS or thinking to open NPS newly?

Pinaki-I don’t think it is good. Because first thing in all probability your return from RD will be equal (may be slight change) PPF. Second thing, return from RD will be taxable, which is not the case with PPF. Hence I still strongly feel that monthly contribution in PPF holds upper hand.

thank you for your reply.I have mandatory NPS like all bankers in public sector banks.

Regards,

Pinaki

Pinaki-If you have mandatory NPS then no need to think and contribute it. In other words, it is good in return part but less liquidity and Govt need to work on taxation part. Let us hope for better in future 🙂

Hello Basu,

I opened a PPF account with ICICI bank in Dec 2013. So far, I have deposited 40,000.

Even tough I started in Dec 2013, my first year in PPF is from April 2013 isn’t? Can I move the remaining 60,000 now to my PPF account with in April 5 2014, to have 1 Lac invested in the first year and to maximize the returns? Can I see the interest credited to my account online? Or should I leave this year and be regular from April 2014 in investing before 5th of every month?

Not sure, I I articulated my query clearly. To put it another way – ‘Should I invest 60k before the fast approaching April 5 2014?

-Prabhu.S

Prabhu-Yes your year start from 1st April 2013 and you have option to complete maximum limit of Rs.1,00,000 within 31st March 2014 (to invest another Rs.60,000). Your interest will get credited after completion of one year. I hope you got the right answer from my end. If you still confused then let me know to discuss further.

Hello Basu,

No. That was clear! Thanks much. I calculated that the interest for this year on investing 1L would only be around Rs 600 for the delay I did in opening the account. (Or I should have waited till April 2014 to start my account. , isn’t?).

And you would advise one that if possible one should do a lump sum investment of 1Lac before April 5?

-Prabhu.S

Prabhu-For both the doubts my answer is YES.

i have doubt, whether i can invest various amount in each month in FY. i.e one month Rs.5000, next month Rs.3000. in a same FY.

Gopi-You can do so.

Dear Sir, I am a salaried employee working in a private firm. Every two years I have bee changing my job. So fare I have note filed my income tax return. If I need to start doing from this financial year, please advice the way froward. Will I be fined if I file now.

Thanks and Regards

Samuel

Samuel-Filing return is individual responsibility. Let me know in what tax bracket you are into? Whether your employer is deducting TDS every year?

Hi Basu,

Thanks for the monthly split up.

But this is how I usually pay PPF amt.

For every FY, i used to wait till Feb – March month and based on my other LIC premiums which will be used to deduct under section 80C, i take the balance amount and put in PPF account to get tax benefit for full 1 lakh.

Am trying to say that, i used to pay premium only in the FY end and not in the start of the year.

Could you please tell is it ok or should i change my payment period/time ?

Yuva-I think you are more concerned about taxation rather than other options of your financial goals. Please come out of dummy products like traditional LIC plans. Buy term plan and restrict your insurance buying to there itself. Invest in PPF as I mentioned above.

Thaank u Basu for sharing this wonderful information , I really didn’t have any idea about PPF, but after reading this I got the confidence of investing in PPF. I appreciate ur efforts in this. Can you also please guide on how to invest in mutual fund and other equity products. Thank u again.

Subir-Equity investments are meant for long term investments like time horizon of more than 7+ years. If you have any goals which are more than the said time frame then you can start investing monthly. If you are first time investor then better to take the help of adviser in your area otherwise you can go ahead with Direct plans which are cost effective than normal plans.

Hi,

I want to invest in PPF for tax saving purpose for year ending 31st March, 2014. If I invest 40,000 today. Will I get tax benefit? Plus, when will I start getting interest on this amount? From April 2014 onwards?

Also for the next year, is it wise to invest the same amount before April 5, 2014? In that case how the interest is calculated? previous years 40,000+ current year’s 40,000?

Please guide.

Thanks,

Avadhut

Avadhut-If you invest this month means (as it is already 13th March) your invested amount will start to fetch interest from 1st April 2014. But you can avail tax benefit in this FY as you invested prior to 31st March 2014. The best move to invest in PPF will be, if you are opting for lump sum investment then within 1st to 5th April every year. If monthly contribution then each month before 5th.

For detailed procedure of interest calculation, you can visit this post “PPF-When to contribute to get higher return?“.

HI Basu,

i made a last minute descison and invested in PPF for a lumpsum of 60k on feb .. so will my intrest be low for the first year and can i make the next investment in april?

Arun-Yes if you invested Rs.60,000 before 5th of February then you will get interest for months of February and March, otherwise only for March monthly only. Hence it is better if you plan to invest lump sum on yearly base in PPF, better to invest between 1st and 5th of April every year.

Thank you Basu… one more doubt is for 2013-2014 i have made PPF investment as 1 lakh lump sum in Feb , so can i do a 1 lakh Lump sum in April for 2014-2015 …..

Arun-You can do so.

Hi ,

I have two Jeevan Anand policies with sum assured of 3lacs and 2 lacs respectively (16k and 14k premium) . I am planning to paid up the 2 lacs policy and invest the 14k amount in ppf … Is it wise move … Please note that the policy was taken before 5 yrs … 11 yrs premium left.

Ranjani-My suggestion will be to put around 40% in PPF and rest into well diversified equity mutual fund. You are ready to wait for another 15 years (by putting into PPF), so why can’t take the advantage of long term investment in equity. By doing so you can earn well and diversify your investment also.

Mr. which is the best way to inwest in ppf AC. monthly or yearly ??

Ajay-If lump sum investment then it will be between 1st to 5th of April every year. But if it is monthly, then each month between 1st to 5th. Flexibility of finance will be decided by yourself.

I have completedcompleted 15 years and renewed for 5 years and 2 years are left. Should I continue or invest elsewhere. I do take the benefit of the rebate.

Hi Basu,

It seems there is an error in mentioning the 1st year Principal of Mr. X.

Below thing is mentioned in the page:

(8000*12)+(4465)=1,00,565

while it should have been 1,00,465.

Bharat-Yes you are right but interest will be total Rs.4,472. When you look at different calculators then they show some slight changes in values. Thanks for correcting and I am updated the same.

Sir I am able to invest 3000 INR per month. …

Vill u please suggest me some investment plans? ?

Punesh-Without knowing your basics I can’t recommend any product. Please do share your goals, current investment, income, family dependents and your risk appetite. Then I will be in a better position to advise you. If you feel not share this personal information on this platform then you can mail me. I will definitely guide you.

PPF A\c How Many Time Exentsion

Hemant-You can take extend for 5 yrs of block as many times as you wish. To know complete details about this feature visit my recent post “All about Public Provident Fund (PPF)”.

The difference elaborated in a clear picture is very nice to understand especially for those who ignores frequently.

Raveendra-Yes it is ignored by lot. Pleasure if you share this post with your friends too.

Very helpful!! Thanks Basu!

gr8 expo….,thx

Shiva-Thanks 🙂

this one is very good, i already have a PPF account.

But maintain regularity in investment for your long term financial goals. As it is guaranteed return, invest some percentage of your portfolio investment into this. But dont put all ur eggs in one basket. Maintain that diversification. Thanks for your comment. Hope my future posts will also make you happy.