If you are planning to invest in Public Provident Fund (PPF) in FY 2023-24, the best date to do so is today and tomorrow. PPF is one of the most popular tax-saving investment schemes that also offers decent returns (currently at 7.1%) over a long maturity period of 15 years. Moreover, the amount invested in PPF (up to Rs 1.5 lakh), interest earned and the maturity proceeds are free from taxes.
However, when it comes to investing in PPF, many investors wait till the end of the Financial Year and invest in this scheme as a last resort for tax savings. But by doing so, they fail to gain maximum benefit from the scheme as the interest calculation starts from the month of April itself.
Best Date To Invest in PPF
You can deposit any amount ranging from Rs 500 up to Rs 1.5 lakh in a financial year. To make the most from PPF, account holders should try to invest the full amount for the year by April 5. Here are some reasons for doing that.
Interest on PPF deposits is calculated on a monthly basis.
While the interest earned is credited to the accounts towards the end of the financial year, the interest calculation is done on the minimum balance in the account during the period between the end of the 5th day and the end of the month. This means, if you invest in PPF account on or before 5th April then your deposit will earn interest for the full 12 months of FY 2023-24. In case you make a deposit on any day after the 5th of April, then you will receive interest only for 11 months.
Also Read: Why you should continue to invest in Public Provident Fund (PPF)
For example, if your invest Rs 1.5 lakh in your PPF account by today or tomorrow (5th of April), the total balance in the account will become eligible for monthly interest calculation.
If you invest Rs 1.5 lakh on the 6th of April, your account balance will go up. But the monthly interest will be calculated only on the minimum account balance between the end of 5th of April and the end of the month. So any amount you invest after the 5th of April and till April 30 will become eligible to be considered for interest calculation only next month. Therefore, you can earn the interest for the full 12 months if you invest in PPF account by April 5 i.e. tomorrow.
Also Read: How much should you invest in PPF?
What to do if you fail to invest in PPF by tomorrow
No need to worry much even if you fail to invest in PPF by tomorrow. You can make your PPF investment on any day till the end of the Financial Year. As of now, the annual PPF interest rate is 7.1%. So the monthly interest that your deposits can earn is equal to 7.1%/12 = 0.59% (approx).
The Government has kept the PPF interest rate unchanged at 7.1% for the first quarter of FY 2023-24. The interest rate for PPF and other National Savings Scheme accounts is revised by the Finance Ministry on a quarterly basis.