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How do I make PPF entries for the past year?

edited March 2013 in General

Some of points related to a PPF investment.

1) PPF Interest calculations are done as per PPF rules (interest calculation on minimum balance between 5th and end of the month)

2) If the interest rate was different for the prior period, you need to pass the entry of interest up to that financial year as per the PPF passbook

3) The interest rate in the first transaction should be the current interest rate for PPF

4) If the interest rate has not changed from say, 01-04-2005, then you may or may not pass the entries for these years. The interest calculation should be the same in MProfit

5) Once you pass any entry of PPF interest on 31st March, MProfit calculates interest from 1st April of that year. It will ignore the interest calculation of prior period with the assumption that you have already passed the correct interest entries.

As an example take a look at the following PPF transactions:

Transaction 1:
Interest rate: 9%
Date of Investment : 25-03-2004
Amount: 50,000/-

Transaction 2:
Interest rate: 9%
Date of Investment : 01-03-2005
Amount: 50,000/-

Transaction 3:
Interest rate: 8.5%
Date of Investment : 12-03-2006
Amount: 50,000/-

To change the interest rate goto Transaction 1 and edit the interest rate from 9% to 8.5%. 

Now you will need to pass entry of interest calculation for 31-03-2005 to take effect of interest up to 31-03-2005. Steps for Transaction 4:

Double click on the asset name
Click Add-Interest/Withdrawal
Select Interest (Cumulative)
Date: 31-Mar-2005
Amount: 4875/-

The closing balance will be 1,04,875 as on 31-Mar-2005. The interest calculation will start from 01-Apr-2005 on the new balance, which will be displayed today’s gain and overall gain in summary screen.

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