Public Provident Fund (PPF) is a popular medium for long-term and tax-efficient investment. This savings scheme has a 15-year lock-in period, which means you cannot withdraw money during this time. You can also extend this lock-in period in blocks of 5 years if you wish. Many investors choose this scheme for safe and reliable returns. Currently, the interest rate on this scheme is 7.1 percent for the April–June quarter of 2026.
Experts say that to get higher returns in PPF, it is crucial to make timely decisions. They advise investing before April 5. Doing so ensures you earn interest for the entire year. This small step at the beginning of the financial year can help increase returns by lakhs of rupees in the long term.
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Why is the April 5 deadline important?
Interest in PPF is calculated on the minimum balance between the 5th of each month and the end of the month. So, if money is deposited between April 1 and 5, that amount starts earning interest from April itself. But if money is deposited after April 5, interest calculation starts from the next month. As a result, you get one month less interest every year.
For example, if ₹1.5 lakh is deposited before April 5, you will get interest for the full 12 months. This can yield approximately ₹10,650 in interest per year. If the same amount is deposited on April 6, you will get interest for only 11 months. Then the interest amount becomes approximately ₹9,763. The difference here is about ₹887. Though the amount may seem small, in the long term, this gap increases significantly due to compounding.
What is the impact of compounding over 15 years?
Regular investment in PPF provides strong benefits of compounding. The earlier each year's money is deposited, the longer it will earn interest. If ₹1.5 lakh is invested each year at the beginning of the financial year, the total investment over 15 years will be ₹22.5 lakh. From this, approximately ₹40.68 lakh can be received at maturity. Interest of approximately ₹18.18 lakh can be earned.
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But if the investment is made late every year, you do not get the benefit of that extra time. In that case, the maturity value can decrease to approximately ₹37.80 lakh. Interest also reduces to approximately ₹15.31 lakh.
This means that just by not investing on time, you could lose approximately ₹2.9 lakh. If the investment period is longer, this gap will increase further. Therefore, the decision to invest on time makes a big difference in the long term.
