The PPF (Public Provident Fund) maturity formula calculates how a series of fixed yearly deposits grows into a lump sum at maturity, with interest compounding annually. PPF is a government-backed, long-term savings scheme in India, and this formula uses the annuity-due convention since deposits are treated as made at the start of each financial year.
Formula
FV = P × [(1 + r)ⁿ − 1] / r × (1 + r)
| Variable | Meaning |
|---|---|
| FV | Future value — your maturity amount |
| P | Fixed yearly deposit |
| r | Annual PPF interest rate (as a decimal, e.g. 7.1% = 0.071) |
| n | Number of years invested |
Worked Example
Depositing the maximum ₹1,50,000 per year for 15 years at the current 7.1% annual rate:
- Annuity growth factor: [(1.071)¹⁵ − 1] ÷ 0.071 × 1.071 = 27.1214
- FV = 1,50,000 × 27.1214 = ₹40,68,209
- Total invested: ₹1,50,000 × 15 = ₹22,50,000
- Interest earned: ₹40,68,209 − ₹22,50,000 = ₹18,18,209
The interest earned (₹18.18 lakh) comes close to matching the total amount deposited (₹22.5 lakh), showing how much annual compounding adds over a full 15-year PPF term even though every deposit is capped at ₹1.5 lakh per year.
Key Things to Know
- PPF compounds annually, not monthly or quarterly, so interest is calculated and credited to the account balance once a year — a slower compounding cadence than most bank fixed deposits.
- The government sets the rate every quarter, so a real PPF account's growth is a chain of shorter compounding periods at slightly different rates rather than one constant rate for 15 years. This formula uses a single rate as a simplifying assumption for projection.
- Depositing early in the financial year matters because PPF interest is calculated on the lowest balance between the 5th and last day of each month — a deposit made in April earns interest for the full year, while the same deposit made in March earns almost none for that year.
- The 15-year minimum term is non-negotiable for the primary lock-in, though partial withdrawals are allowed from the 7th year onward — this formula only models the maturity value, not partial withdrawal scenarios.