New Delhi|Jagran Business Desk: The Public Provident Fund (PPF) is a very popular long-term investment option in India. There are plenty of reasons responsible for this including high returns, tax benefits, and sovereign guarantees of interest and principal. Investors can invest in this scheme, besides creating a large retirement fund, and can also collect money for huge expenses including children's education and their marriages as well. The most important thing is that in this scheme, interest income, annual investment and maturity amount, all three get interest rebate.

In the new announcements for the financial year 2020-21, The government has not made any change in the PPF interest rate for the July-September quarter meaning that PPF will continue to receive interest at the rate of 7.10 percent even during July to September. The interest in PPF is calculated every month but is credited only at the end of the financial year. Many PPF investors miss out on getting more interest in the lack of little information. Let's get to know what that is:

  • The PPF scheme rules that interest is calculated on the minimum amount deposited in a PPF account from the fifth of the month to the end of the month. If the money is added to the PPF account before the fifth date, then the minimum balance is higher during the period of calculation of interest. Even if you are investing in PPF on an annual basis, you should put the amount in your PPF account before April 5. In such a situation you will get maximum interest in the scheme.

  • Status on depositing money after five months of the month is yet another way to get the benefits.

Suppose a person deposits Rs 12,500 every year from April to March after the fifth of every month.  In such a case, that investor will get interest of zero rupees in April at the rate of 7.10 percent interest rate, because on the fifth of the month, the balance of PPF account will be zero rupees, which is the minimum and the interest received from it will also be zero rupees. After this, in May also the investor will get interest only on Rs 12,500, because in case of depositing the money after the fifth date, in May also the minimum balance of the account will be Rs 12,500, on which the interest is to be calculated. In this way, the investor will get a total of Rs 4,881.25 as interest at the end of the year and the balance of the account will be Rs 1,54,881.25 at the end of the year.   


  • Status of depositing money before the fifth of the month.

If an investor deposits Rs 12,500 before the 5th of every month throughout the year from April to March, then that investor will also get interest for the month of April and in May he will get interest at Rs 25,000. That investor will get Rs 5,769 as interest at the end of the year. Also, the total balance of the account will also be Rs 1,55,769 at the end of the year.

  • Lump-sum deposit.

If an investor deposits a lump sum of Rs 1,50,000 in the PPF account before the 5th of April in the month instead of depositing money every month, he will get maximum interest. Such an investor will get an interest of Rs 888 on Rs 1.5 lakh every month from April to March. This investor will get a total of Rs 10,650 as interest at the end of the year, bringing the total deposits at the end of the year to Rs 16,650.

It was a matter of one year before or after the fifth of the month or after the lump sum amount of the year, but the difference would increase considerably in the long run.

Posted By: Simran Babbar