How PPF Interest Is Calculated: Contribution Timing, Rate and Maturity

Keep the projection method and scheme accounting separate

The ArthaSiddhi calculator produces a smooth annual projection. An actual PPF account follows scheme rules, actual deposit dates and the rates applicable over time. The two share concepts such as contributions and interest, but they are not the same accounting process.

How the ArthaSiddhi projection builds each year

The engine does not model monthly deposits, intra-year balance changes or a history of variable notified rates. Its schedule labels each row as opening balance, contribution, interest and closing balance so those assumptions remain visible.

• Start with the previous modeled closing balance.
• Add one fixed annual contribution at the beginning of the modeled year.
• Apply the same entered annual rate to that combined amount.
• Add the modeled interest to produce the closing balance.
• Repeat for the selected whole-year tenure.

First two years of the controlled projection

For ₹1,50,000 contributed annually, a 7.1% illustrative constant rate and 15 modeled years, the first contribution is added before the first year's interest. The first year's modeled interest is ₹10,650, producing a ₹1,60,650 closing balance.

Actual PPF interest eligibility depends on monthly balances

Under the verified PPF Scheme, the lowest balance at credit between the close of the fifth day and the end of each month is eligible for interest. Interest is credited to the account at the end of the year.

A deposit's date can therefore affect actual interest eligibility. The annual calculator schedule does not reproduce this monthly balance selection and should not be used to infer that every actual annual contribution receives a full year's interest.

One entered rate is an assumption, not a rate history

Government-notified PPF rates can change. The calculator has one editable rate field and applies that percentage across every modeled year. It does not dynamically consume rate notifications or apply different rates to different periods.

For the broader scheme context, return to PPF Explained. For the practical consequence of these assumptions, read why a projection may differ from actual maturity.