How is PPF Interest calculated if I pay before 5th of every month ?

POSTED BY gnanesh.balaram ON January 23, 2014 12:07 pm COMMENTS (5)

Good morning

If i pay my monthly ppf before 5th of every month, How is the interest calculated ?

for example if my balance is 22,000 RS for DEC 2013 and in Jan 2014 i will deposit 1200 RS before 5 th on which amount the interest calculate for total amount 23200 RS or 1200 RS .

5 replies on this article “How is PPF Interest calculated if I pay before 5th of every month ?”

  1. nsabhyankar says:

    Every month, interest is calculated but not deposited in the A\C.

    As Dear Lokesh has pointed out, the entire interest for the FY is deposited on the last day of the FY (31st march). If you go through your account statement or the passbook, you will find only one entry per FY for interest deposit.

    As a result, the compounding (earning interest on interest) takes effect only after the end of an FY.

    FY: Financial year (April to March)

  2. ylokesh says:

    Ya that’s right, but the interest will be paid only once in a year at the end of the financial year.

  3. nsabhyankar says:

    The interest is calculated on the total balance, not just the deposit for that particular month (up to the 5th). So, in this example, the interest will be based on (22000+1200) and not just on 1200.
    By rule, the minimum of end of day (EOD) balances from the 5th up to the month end is considered. This includes any deposits made up to the 5th of the current month and any interest earned up to the previous FY.

    1. gnanesh.balaram says:

      thanks for reply sir nsabhyankar . so every month interest add and it is in the end of the yr

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