Tax-free income: You can get Rs 72,000 per month tax-free income from Public Provident Fund, know how

 

PPF Calculations: PPF investors can make unlimited deposits in a financial year. The scheme provides a fixed interest rate, and the corpus generated is also tax-free. PPF account holders can use the scheme to get tax-free regular income in their retirement phase.

PPF Calculations: Public Provident Fund (PPF) is a scheme people often use to create a retirement corpus. Investors can open a PPF account in post office or in a bank with a minimum investment of Rs 500. The scheme allows investors to make unlimited deposits in a financial year. They need to maintain the account with a minimum deposit of Rs 500 every financial year. The scheme has a maturity period of 15 years. The account holder can continue their account with or without deposits after the maturity. The corpus generated from the PPF deposit can be used to get regular tax-free income just from the interest amount. Deposits up to Rs 1.50 lakh in a financial year in PPF are also tax-free. One can also get Rs 72,000 income a month through PPF withdrawals.

How PPF can generate retirement corpus

In retirement planning, the investor can diversify their portfolio with market-linked and non-market-linked investment options. Since PPF provides a fixed interest rate, investors can use it to form the debt portion of their portfolio.

For how long one can invest in PPF?

The PPF account matures in 15 years, but investors can take extensions of 5 years each after that.

What is the minimum and maximum PPF investment?

The minimum investment in a financial year is Rs 500, while the maximum is Rs 1.50 lakh.

Does post office offer higher PPF interest rate than banks?

The PPF interest rate for the post office and banks is 7.1 per cent.

Can one withdraw PPF amount before maturity period of 15 years?

A PPF subscriber is allowed to take 1 withdrawal during a financial year after 5 years, excluding the year of account opening. (if the account is open during 2023-24, the withdrawal can be taken during or after 2029-30)

Can one withdraw PPF amount before maturity period of 15 years?

The amount of withdrawal can be taken up to 50 per cent of the balance at the credit at the end of the 4th preceding year or at the end of the preceding year, whichever is lower. (i.e., withdrawal can be taken in 2023-24, up to 50% of the balance as on 31.03.2023 or 31.03.2023, whichever is lower).

What options do PPF account holders have after 15 years?

After 15 years of the maturity period, investors can continue their account with or without deposits. They can extend their account for unlimited blocks of 5 years each. In either case, they will keep getting compound interest on their corpus.

How to get Rs 71,000 income a month from PPF

For that the investors need to begin with an Rs 1.50 lakh investment every financial year and keep making it till the maturity period of 15 years. To get the maximum benefit of interest, the investment should be made between April 1-5 every financial year.

What will be PPF corpus after 15 years?

The investment amount in 15 years will be Rs 22,50,000, the estimated interest will be Rs 18,18,209, and the estimated maturity will be Rs 40,68,209. The investor needs to take an extension of 5 years and keep investing Rs 1.50 lakh a year in the same way as earlier.

What will be PPF corpus after 20 years?

In 20 years, the total investment will be Rs 30,00,000, the estimated interest will be Rs 36,58,288, and the estimated corpus will be Rs 66,58,288. At this stage, the investor needs to take another extension of 5 years and continue the practice of investing Rs 1.50 lakh a year.

What will be PPF corpus after 25 years?

In 20 years, the total investment will be Rs 37,50,000, the estimated interest will be Rs 65,58,015, and the estimated corpus will be Rs 1,03,08,015. The investor needs to take another extension of 5 years and keep investing Rs 1.50 lakh a year for 2 more years.

What will be PPF corpus after 27 years?

In 27 years, the total investment will be Rs 40,50,000, the estimated interest will be Rs 81,06,422, and the estimated corpus will be Rs 1,21,56,422.

What PPF investor can do

From here onwards, they can start withdrawing interest on the entire corpus. During extensions, the account holder are allowed to withdraw the interest amount once a year.

What will be interest amount?

At a 7.1 per cent interest rate, the interest in a year will be Rs 8,63,105.962, which will be equal to Rs 71,926 a month.