PPF 5th Day Deposit Rule: How Deposit Date Impacts Interest
Missed Depositing Before the 5th? You Could Lose a Full Month's Interest on Your Whole PPF Balance
✨ Public Provident Fund (PPF) calculates monthly interest on the lowest balance available in your account between the close of the 5th day and the end of every month. Depositing on or before the 5th ensures you earn 100% tax-free interest for that month.
Always deposit in PPF on or before the 5th of every month. A 1-day delay on the 6th forfeits the entire month's interest credit!
Test Your Deposit Date vs Interest Earned
Visual Process Timeline
Deposit Cleared by 5th
Eligible for MonthYour bank or UPI transfer clears into the PPF account before 11:59 PM on the 5th of the month.
Lowest Balance Computation
Monthly Interest CalculatedGovernment computes the minimum balance recorded between the 5th and last day of the month.
March 31st Annual Credit
100% EEE Tax-FreeCalculated monthly interest accumulates and is credited on March 31st every year, compounding tax-free.
Why This Rule Works So Well
Under Paragraph 11 of the Public Provident Fund Scheme, interest is calculated on the lowest balance in the account between the close of the fifth day and the end of the month.
If you deposit money on the 4th, your account balance increases before the 5th cutoff. Thus, the government includes your new deposit in that month's interest calculation.
If you deposit on the 6th, your deposit arrives AFTER the 5th cutoff. The lowest balance between the 5th and end of the month remains your OLD balance.
Over 15 years, depositing after the 5th every month causes a loss of over ₹1.2 Lakh in missed compound interest!
Real Family Scenarios
Rahul's Automated Standing Instruction
Rahul sets an auto-debit on the 1st of every month for ₹12,500 into his PPF account.
Ankit's Payday Slip-Up
Ankit transfers ₹12,500 after receiving his salary on the 7th of every month.
Priya's April Lump Sum Strategy
Priya deposits her full annual cap of ₹1.5 Lakh on April 3rd at the start of the financial year.
Sanjay's Mid-Month Transfer
Sanjay deposits ₹1.5 Lakh on April 12th after selling some old assets.
Common Mistakes & Costly Pitfalls
❌Cheque Deposit on the 5th
Dropping a cheque in the branch on the 5th takes 2-3 working days to clear. Clearance on the 7th forfeits the month's interest.
❌Standing Instruction set for the 5th
If the 5th falls on a Sunday or bank holiday, NEFT/RTGS processes on the 6th.
Where This Shortcut Breaks Down
Every Financial Shortcut Has Limits
While this shortcut is excellent for quick mental estimation, here is exactly where reality diverges from theory:
- Inter-Bank Transfer Delays: Bank server downtimes on the 4th or 5th can push credit to the 6th.
- Cheque Clearance Lag: Cheques take up to 3 days; online transfers are instantaneous.
Suitable Calculators for PPF 5th Day Deposit Rule
Want to calculate exact compound interest, retirement targets, or loan EMIs based on this rule? Use these free interactive calculators:
Frequently Asked Questions
When is interest credited in PPF?
Interest is calculated monthly on the lowest balance between the 5th and the end of the month, but it is credited to your account as a lump sum on March 31st of every financial year.
What happens if I deposit on the 5th of the month?
If you deposit on or before the 5th (and funds clear on or before the 5th), you will get full interest for that entire month.
What happens if I deposit on the 6th of the month?
If you deposit on the 6th, you will not receive any interest on that newly deposited amount for the current month. Interest on that deposit starts earning from the following month.
Is it better to deposit in PPF monthly or once a year?
Depositing a lump sum of ₹1.5 Lakh between April 1st and April 5th generates the highest possible interest for the financial year. If doing monthly SIPs, deposit before the 5th of every month.