Want to get a tax-free income of over Rs 1 lakh per month? You might be surprised to learn that a Public Provident Fund (PPF) can help you generate this sizeable corpus. This safe and reliable investment option offers guaranteed returns and tax benefits. But how can you achieve this target? Read on to find out the simple strategy to generate a regular tax-free income from PPF.
What is Public Provident Fund?
PPF is a government-backed savings scheme in India that offers tax benefits under section 80C of the Income Tax Act 1961. You can easily open a PPF account at a bank or post office.
How much can you invest in PPF?
You can start investing from Rs 500 as a minimum deposit in a financial year and a maximum of Rs 1.5 lakh in a PPF account every year.
What is lock-in period in PPF account?
Public Provident Fund account has a 15-year lock-in period on investment. After this period, you can extend your account in blocks of 5 years for as long as you want, giving you flexibility and control over your investment.
How much can you withdraw before maturity period of 15 years in PPF?
A PPF account holder is allowed to take 1 withdrawal during a financial year after 5 years.
Tax benefits
You can claim tax deductions on contributions up to Rs 1.5 lakh under Section 80C, and the interest earned plus the final corpus are completely tax-free.
How much can you withdraw at end of preceding year?
You can withdraw up to 50 per cent of the total balance in one transaction at the end of the preceding year.
What happens to PPF account after 15 years?
After 15 years of the maturity period, you can continue your account with or without deposits.
How to get over Rs 1 lakh/month from PPF?
To generate Rs 1 lakh/month from PPF you have to begin with Rs 1.50 lakh investment every financial year and continue 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 your 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 can take an extension of 5 years and keep investing Rs 1.50 lakh a year in the same way as before.
What will be your 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 can take another extension of 5 years and continue the practice of investing Rs 1.50 lakh a year.
What will be your PPF corpus after 25 years?
In 25 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.
What will be your PPF corpus after 30 years?
In 30 years, the total investment will be Rs 45,00,000, the estimated interest will be Rs 1,09,50,911, and the estimated corpus will be Rs 1,54,50,911.
What will be PPF corpus after 35 years?
In 35 years, the total investment will be Rs 52,50,000, the estimated interest will be Rs 1,74,47,857, and the estimated corpus will be Rs 2,26,97,85.
What is next step after 35 years of investment?
From here onwards, you can start withdrawing interest on the entire corpus. During extensions, the account holder is allowed to withdraw the interest amount once a year.
PPF monthly amount: Estimate your regular income
At 7.1 per cent interest, you will get Rs 1,34,295 a month.
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
