In a PPF account, the interest is calculated on the minimum balance on the 5th of every month. On depositing the money on this day, you will get interest for the whole month.
New Delhi. There is no break of PPF in Small Savings Scheme and Tax Saving. If you also have a PPF account, then this news is very important for you. If you invest in a PPF account on the fifth of every month, then you get more interest. This is due to the way the interest is calculated.
Currently, the calculation of interest on PPF takes place on a monthly basis, but that interest is credited to the account at the end of the financial year. Interest is calculated between the 5th to the last date of every month on the minimum balance of PPF account. If you invest in PPF on or before 5th date, then the interest on that money will also be calculated, whereas if you invest after 5th date, then you will get interest only on the money up to the previous month. That is, you will lose interest for a full month.
Understand your benefit in this way
If you invested 50 thousand rupees in PPF by 5 March. The interest rate is 7.1 percent and the balance of the account till February 28 is 3 lakh rupees. In this case, the minimum balance of the account till March 31 will be considered as Rs 3.5 lakh. On this basis, the calculation of interest will be something like this – 7.1% / 12 * 3.5 lakh = Rs 2,071. Whereas, if you invest 50 thousand rupees on 6 March and your balance is 3 lakh rupees till 28 February, then the balance of your account for March will be considered as 3 lakh rupees only. In such a situation the calculation of interest would be something like this- 7.1% / 12 * 3 lakhs = 1775 rupees. That is, due to the difference of only one day, you will have to bear a loss of Rs 296.
PPF gets 7.1 percent interest
Currently, the investment in PPF gets 7.1 percent interest. On March 30, 2020, the government had cut the interest on small savings scheme. In the past too, the government had cut it to 6.4 per cent, cutting the interest sharply, but soon in the morning the government changed its decision by saying that it had happened by mistake. The interest paid on small savings schemes and PPF by the government is assessed every quarter.
