The Public Provident Fund (PPF) is a government-backed savings scheme that combines safety, tax benefits, and long-term wealth creation. A common doubt among investors is: Should I invest the full amount at once in April, or spread it across monthly instalments? And how important is the 5th of the month rule?
Let’s break down Annual vs Monthly Deposit in PPF – Which is Better for Higher Returns ? with examples, tables, and comparisons.
If you deposit ₹1.5 lakh on 1st April:
If you deposit ₹1.5 lakh on 10th April:
Suppose you deposit ₹12,500 every month:
Even with proper timing, monthly deposits earn less compared to lump sum, because the full balance is not available from April.
PPF follows a simple rule: Interest is given only on the lowest balance between 5th and last day of the month.
Deposit on or before 5th → earns interest from that month.
Deposit after 5th → earns interest only from the next month.
| Month | If Deposited on 3rd (before 5th) | If Deposited on 10th (after 5th) |
|---|---|---|
| April | ₹10,000 earns from April | ₹10,000 earns from May |
| May | ₹20,000 earns from May | ₹10,000 (April) earns, May deposit from June |
| June | ₹30,000 earns from June | ₹20,000 earns, June deposit from July |
| July | ₹40,000 earns from July | ₹30,000 earns, July deposit from August |
| August | ₹50,000 earns from August | ₹40,000 earns, August deposit from September |
| … | … | … |
| March | ₹1,20,000 earns from March | ₹1,10,000 earns, March deposit from April next year |
Key takeaway: Deposits after 5th lose one month’s interest every time, which reduces overall returns.
Assuming ₹1.5 lakh investment per year at 7.1% annual interest:
| Year | Annual Lump Sum (before 5th April) | Monthly Deposit (before 5th) | Monthly Deposit (after 5th) |
|---|---|---|---|
| 1 | ₹1,60,650 | ₹1,59,100 | ₹1,58,200 |
| 5 | ₹9,25,000 | ₹9,12,000 | ₹9,00,000 |
| 10 | ₹21,50,000 | ₹21,20,000 | ₹21,00,000 |
| 15 | ₹42,00,000+ | ₹40,80,000+ | ₹40,00,000+ |
Both options are perfectly okay. PPF doesn’t force you to choose one. The only real thing that matters is when your money goes into the account.
PPF interest is calculated on:
When you deposit the full amount once a year (ideally in early April):
Not really.
If you deposit before the 5th every month, you still earn interest properly. The difference compared to annual deposit is usually very minor.
Just remember one thing:
Yes, but it’s simple:
It depends on your cash flow:
Both are fine as long as you’re consistent.
No.
Tax benefit under Section 80C depends only on the total amount deposited, not how or when you deposit it.
It’s not a problem at all.
Honestly, the better option is:
PPF rewards discipline, not perfection.
The Public Provident Fund (PPF) is a government-backed savings scheme that combines safety, tax benefits, and long-term wealth creation. A common doubt among investors is: Should I invest the full amount at once in April, or spread it across monthly instalments? And how important is the 5th of the month rule?
Let’s break down Annual vs Monthly Deposit in PPF – Which is Better for Higher Returns ? with examples, tables, and comparisons.
If you deposit ₹1.5 lakh on 1st April:
If you deposit ₹1.5 lakh on 10th April:
Suppose you deposit ₹12,500 every month:
Even with proper timing, monthly deposits earn less compared to lump sum, because the full balance is not available from April.
PPF follows a simple rule: Interest is given only on the lowest balance between 5th and last day of the month.
Deposit on or before 5th → earns interest from that month.
Deposit after 5th → earns interest only from the next month.
| Month | If Deposited on 3rd (before 5th) | If Deposited on 10th (after 5th) |
|---|---|---|
| April | ₹10,000 earns from April | ₹10,000 earns from May |
| May | ₹20,000 earns from May | ₹10,000 (April) earns, May deposit from June |
| June | ₹30,000 earns from June | ₹20,000 earns, June deposit from July |
| July | ₹40,000 earns from July | ₹30,000 earns, July deposit from August |
| August | ₹50,000 earns from August | ₹40,000 earns, August deposit from September |
| … | … | … |
| March | ₹1,20,000 earns from March | ₹1,10,000 earns, March deposit from April next year |
Key takeaway: Deposits after 5th lose one month’s interest every time, which reduces overall returns.
Assuming ₹1.5 lakh investment per year at 7.1% annual interest:
| Year | Annual Lump Sum (before 5th April) | Monthly Deposit (before 5th) | Monthly Deposit (after 5th) |
|---|---|---|---|
| 1 | ₹1,60,650 | ₹1,59,100 | ₹1,58,200 |
| 5 | ₹9,25,000 | ₹9,12,000 | ₹9,00,000 |
| 10 | ₹21,50,000 | ₹21,20,000 | ₹21,00,000 |
| 15 | ₹42,00,000+ | ₹40,80,000+ | ₹40,00,000+ |
Both options are perfectly okay. PPF doesn’t force you to choose one. The only real thing that matters is when your money goes into the account.
PPF interest is calculated on:
When you deposit the full amount once a year (ideally in early April):
Not really.
If you deposit before the 5th every month, you still earn interest properly. The difference compared to annual deposit is usually very minor.
Just remember one thing:
Yes, but it’s simple:
It depends on your cash flow:
Both are fine as long as you’re consistent.
No.
Tax benefit under Section 80C depends only on the total amount deposited, not how or when you deposit it.
It’s not a problem at all.
Honestly, the better option is:
PPF rewards discipline, not perfection.
