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21-Sep-2019 03:06

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Lump-sum contribution On the other hand, interest is calculated as follows in case you make a one-time lumpsum deposit during the fiscal: If the date of deposit in case of lump-sum contribution had been after 5th of April, in that case, you would have not earned the interest for the month of April.The interest earned in that case would have been Rs 10,450.

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This increased amount becomes the principal for the next time period (compounding period) and also earns interest.

In other words, you earn interest not only on the principal amount, but also on the interest earned in each compounding period.