What does the law say
According to the rules of the PPF, the calculation of interest on PPF takes place from the 5th to the end of the month at the minimum balance. Interest on PPF deposits is calculated every month. But it is credited only at the end of the financial year.
Why Fill Install Before 5th Month of Every MonthBefore depositing the installment of the PPF before the 5th of every month, the interest of that month comes with the addition of both the already existing and subsequent deposits. The reason for this is that the calculation of interest is on the amounts between the 5th day ending and the last date of the month.
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If you are putting money once in a year
If you deposit money only once in a year in PPF, then deposit it even before 5th of the month of April. It is because of India's fiscal year April to March count, and for the interest of banks and Post Office Savings Scheme, it is also counted from April to March. Therefore, it is beneficial to deposit the annual amounts in the PPF before April 5, to take full advantage of interest throughout the year.
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Tax saving facility
PPF is a good investment option for tax savings. In this, the amount deposited by you is tax-free, as well as the amount received after the completion of interest and maturity period is also tax-free. At present, the interest rate on PPF is 8% per annum. It can be invested up to a minimum investment of Rs 500 and a maximum investment of up to Rs 1.5 lakh per annum.
Think of mathematics of PPF interest like this
If you deposit your lump sum amount of 1.5 lakhs before 5th April in your PPF account, you are paid an annual interest of 8 per cent on PPF before the quarter of April to June 2019. The interest calculated for the month of April is done on the basis of minimum amount deposited in the account between April 5 and April 30. If a person has deposited Rs. 1.5 in his PPF account before April 5 and has not deposited any other amount this year then the interest would be calculated in this way. (1,50,000X8%) / 12 = 1,000 bucks This amount of interest has been divided by 12, because interest is calculated on a monthly basis. In this case, in the month of April, PPF accounts will get interest of Rs 1,000. The same amount will be available in the month of May and June as interest rates for the quarter of the year remain the same. In this case, additional interest of three thousand rupees will be available in three months. If you add it to the amount of interest you get in 15 years, then you can get the benefit of up to Rs 3.6 lakh.
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