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Why Your PPF Deposit Date Changes Your Maturity Value

By Pradipta Ray · Published

The Public Provident Fund has one rule that almost no calculator models and almost no account holder knows: a deposit that lands on the 6th earns nothing for that month. Over fifteen years, the date alone is worth real money.

The Public Provident Fund Scheme 2019 says interest for a calendar month is calculated on the lowest balance in the account between the close of the fifth day and the last day of that month. Interest is then credited once, at the end of the financial year.

Money deposited on or before the 5th is in the account at the close of the 5th, so it counts. Money deposited on the 6th is not, so that month it earns nothing at all.

What one day is worth

Here is ₹12,500 a month - the full ₹1.5 lakh annual limit - for fifteen years, with nothing changing except when the money arrives.

Identical money - ₹12,500 a month for 15 years at 7.1% - deposited at three different moments.
When the money goes inDepositedMaturity valueDifference
On or before the 5th, monthly₹22,50,000₹39,44,599-
After the 5th, monthly₹22,50,000₹39,22,125- ₹22,475
All at once, early April₹22,50,000₹40,68,209+ ₹1,23,610
Identical money - ₹12,500 a month for 15 years at 7.1% - deposited at three different moments.

Identical deposits. Identical rate. Identical fifteen years. The only variable is the date on the cheque, and it is worth a meaningful sum - for doing nothing differently except setting a standing instruction a few days earlier.

Why the annual deposit does best

The third row in that table is the strongest, and the reason is the same rule. Deposit the full ₹1,50,000 on or before 5 April and the whole amount sits in the account earning interest for all twelve months of that financial year. Spread it monthly and the balance only reaches ₹1,50,000 in March, so most of the year's interest is earned on a fraction of it.

The caveat is obvious: this only helps if you have ₹1.5 lakh spare in April. For most people the monthly route is the realistic one, which makes the 5th-of-the-month discipline the lever that is actually available.

The second rule people miss

Interest is credited at the end of the financial year, not monthly. So interest earned in April 2026 does not start earning its own interest until April 2027.

This is why a calculator that simply compounds your annual deposit at 7.1% overstates the maturity value: it assumes the money was there from day one and that interest compounds as it accrues. Neither is true. The PPF calculator here runs the actual monthly accrual and credits it annually, which is why its figure is lower than several others - and right.

₹12,500 a month for 15 years at 7.1%, deposited on or before the 5th.
Amount
Total deposited₹22,50,000
Interest earned₹16,94,599
Maturity value₹39,44,599
Per financial year₹1,50,000
₹12,500 a month for 15 years at 7.1%, deposited on or before the 5th.
Run your own deposits, with the date that mattersPPF Calculator

What to actually do

  1. Set the standing instruction for the 1st to the 3rd, not the 5th. A bank holiday or a weekend on the 5th can push the credit to the 6th, and the rule has no sympathy.

  2. If you can, deposit annually in early April instead. It is the single largest improvement available on the same money.

  3. Check the credit date, not the debit date. What counts is when the money reaches the PPF account, which is not always the day it left yours.

  4. Do not exceed ₹1,50,000 in a financial year. Deposits above the limit earn no interest and are simply returned.

The rate is not fixed either

PPF pays 7.1% for the July to September 2026 quarter. The Ministry of Finance notifies the rate every quarter, so any fifteen-year projection is assuming a number that will change many times before maturity. Run the calculator at a lower rate as well as the current one - it is the same discipline as testing a SIP at a lower assumed return.

What does not change is the interest rule. The 5th-of-the-month mechanic has survived every rate revision, which is what makes it worth building a habit around.

Frequently asked questions

What happens if I deposit on the 6th?
That deposit earns no interest for that month. It starts earning from the following month, assuming it stays in the account. Do it every month for fifteen years and you have given up fifteen months of interest on your contributions.
Is it better to deposit yearly or monthly in PPF?
Yearly, if you deposit on or before 5 April: the full amount then earns interest for all twelve months. Monthly deposits build the balance gradually, so most of the year's interest is earned on less than the full amount. The table above shows the gap.
When is PPF interest credited?
At the end of each financial year, in one credit. It accrues monthly on the lowest qualifying balance, but it does not enter the account - and therefore does not start earning its own interest - until 31 March.
Why does this calculator show less than others?
Because most PPF calculators compound the annual deposit as though it sat in the account from day one. This one runs the real monthly accrual and credits interest annually, as the scheme does. The lower figure is the one your passbook will show.
Does the 5th rule apply to partial withdrawals too?
It applies, and it does not work in your favour. Because interest is based on the lowest balance in the window, a withdrawal costs you that month's interest on the withdrawn amount whether you take it out on the 2nd or the 28th. Since the cost is the same either way, withdraw early in the month - you get the use of the money for longer at no extra cost.

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