1. What is a PPF vs FD Calculator?

Definition: This calculator estimates the maturity amount of a Public Provident Fund (PPF) investment compared to a Fixed Deposit (FD).

Purpose: It helps investors compare the returns from PPF (which has tax benefits) versus traditional fixed deposits.

2. How Does the Calculator Work?

The calculator uses the PPF maturity formula:

Where:

• \( M \) — Maturity amount
• \( P \) — Annual deposit amount
• \( i \) — Annual interest rate (in decimal)
• \( n \) — Investment period in years

Explanation: The formula accounts for annual compounding and the fact that deposits are typically made at the beginning of each financial year.

3. Importance of PPF vs FD Comparison

Details: PPF offers tax-free returns under Section 80C, while FD interest is taxable. This calculator helps visualize the actual benefit difference.

4. Using the Calculator

Tips: Enter the annual deposit amount, current PPF interest rate (default 7.1%), and investment period (default 15 years). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Why does PPF often outperform FD?
A: PPF benefits from tax-free compounding, while FD interest is taxed annually, reducing effective returns.

Q2: What's the current PPF interest rate?
A: As of 2023, it's 7.1% (0.071 in decimal), but check RBI updates as rates change quarterly.

Q3: What's the minimum investment period for PPF?
A: 15 years, extendable in blocks of 5 years thereafter.

Q4: Can I calculate partial withdrawals?
A: This calculator shows final maturity. Partial withdrawal rules differ after 6 years.

Q5: How to compare with FD?
A: For FD, use simple compound interest formula and subtract applicable taxes for accurate comparison.