How PPF Interest Is Calculated
PPF interest compounds annually, but it's actually computed monthly on a specific balance — and that timing detail can meaningfully change what you earn.
The monthly calculation rule
PPF interest is calculated every month on the lowest balance in your account between the 5th and the last day of that month. The interest for all 12 months is then totaled and credited to your account once, at the end of the financial year (31 March) — which is why the annual growth compounds even though the underlying calculation happens monthly.
Why the deposit date changes your return
Because interest is based on the lowest balance between the 5th and the end of the month, a deposit made before the 5th counts toward that month's interest calculation, while a deposit made after the 5thmisses out on interest for that entire month — even if it's made on the 6th.
Worked example:depositing ₹1,50,000 on 3 April earns a full year of interest on that amount. Depositing the same ₹1,50,000 on 10 April instead means the account's balance for the first five days of April doesn't reflect that deposit, so April is effectively excluded from interest calculation for that amount — a difference of roughly one month's interest on ₹1,50,000, which at a 7.1% rate is on the order of ₹800-900 lost for that single year, purely due to an eight-day difference in deposit timing.
This is why the common advice for PPF is to deposit your full annual contribution as early as possible in the financial year (ideally by 5 April), rather than waiting until March — depositing a lump sum on 1 April every year, instead of spreading it out or depositing late, maximizes the number of months that balance earns interest across the full tenure.
How this calculator models it
The PPF Calculator on this site models the standard case of one annual deposit compounding once per year, which gives an accurate estimate for typical usage. Because the real scheme calculates interest monthly against the lowest balance rule described above, your actual year-end interest may differ slightly from the calculator's estimate depending on exactly when during each month you make deposits.
Use the PPF Calculator to project your maturity value, and see FD vs RD vs PPF for how PPF compares to other guaranteed-return savings options.
Checked against official sources as of August 2026. See our editorial process. For informational purposes only — not financial or tax advice.