Principal means total progressive balance of progressive Balance of each month for the last 12 months.
Rate of Interest is applicable under rules for the financial year i.e. for the year 2004-05.
Rate of Interest = 8% and time = number of months of progressive balance/12 (or number of years)
Formula applicable as model examples for calculation of Interest.
Suppose Closing balance as on 31st March 2005 in respect of subscriber 'A' is Rs. 48,000/- and monthly subscription = Rs. 2000/-P.M. Monthly rate of advance is Rs. 1000/- P.M.
Rate of Interest on GPF for the year 2005-2006 = 8%
Closing Balance as on 31 st March 2005 is Rs.48000/-
| Month | Subscription | Refund | Advance/ Withdrawal Rs. | Progressive Balance |
| April 2005 | 2000 | 1000 | 51,000 | |
| May 2005 | 2000 | 1000 | 54,000 | |
| June 2005 | 2000 | 1000 | 57,000 | |
| July 2005 | 2000 | 1000 | 60,000 | |
| August 2005 | 2000 | 1000 | 63,000 | |
| September 2005 | 2000 | 1000 | 66,000 | |
| October 2005 | 2000 | 1000 | NIL | 69,000 |
| November 2005 | 2000 | 1000 | 72,000 | |
| December 2005 | 2000 | 1000 | 75,000 | |
| January 2006 | 2000 | 1000 | 78,000 | |
| February 2006 | 2000 | 1000 | 81,000 | |
| March 2006 | 2000 | 1000 | 84,000 | |
| Total | 8,10,000 |
Interest as on 1 st April 2006 = 8,10,000/- X 1/12 X 8/100 = Rs. 5400/-
Total Progressive Balance at the end of the year.
(B) Example ‘B’ for part of a year:-
Closing Balance as on 31 st March 2003 is Rs.52000/-
| Month 2004 | Subscription | Refund | Advance/ Withdrawal Rs. | Progressive Balance |
| April | 2000 | 500 | 54,500 | |
| May | 2000 | 500 | 57,000 | |
| June | 2000 | 500 | 6000 | 53,500 |
| July | 2000 | 500 | 56,000 | |
| August | 2000 | 1000 | 59,000 | |
| September | 2000 | 1000 | 62,000 | |
| October | 62,000 | |||
| November | 62,000 | |||
| Total | 4,66,000 |
Interest 4,66,000 X 1/12 X 8/100 = Rs. 3,106.67
Rounded off to Rs. 3,107/-