The Public Provident Fund (PPF) offers a guaranteed 7.1 per cent interest rate and tax benefits. With a minimum investment of just Rs 500, you can open a PPF account at any post office or bank. Let’s find out how you can earn over Rs 95,000/month through strategic PPF investment.

What is Public Provident Fund (PPF)?

The Public Provident Fund (PPF) is a popular retirement savings scheme that also serves as a useful tool for portfolio diversification. Anyone can open a PPF account at a bank or post office, and enjoy guaranteed returns along with tax benefits under Section 80C of the Income Tax Act. This small savings scheme is accessible to all individuals, including those who are salaried and self-employed.

PPF investment limits: Minimum and maximum amounts

The minimum and maximum investment amounts for PPF are:
Minimum: Rs 500 per financial year
Maximum: Rs 1.5 lakh per financial year

Tax benefits in PPF

Investing in PPF offers triple tax benefits:

• Contributions up to Rs 1.5 lakh are eligible for tax deductions under Section 80C.
• Interest earned on your investment is tax-free.
• The maturity corpus is also completely tax-free.

What is maturity period of PPF account?

The maturity period is 15 years. After 15 years, the account holders can extend the account for unlimited blocks of 5 years each.

PPF premature withdrawal rules

While the standard PPF maturity period is 15 years, partial withdrawals are allowed under certain conditions:

You can withdraw up to 50 per cent of the balance after 5 years from the end of the year in which the initial subscription was made.
Certain conditions, such as medical emergencies or educational expenses, may also qualify for premature withdrawal.

How much one can withdraw at end of preceding year?

One can withdraw up to 50 per cent of the balance at the credit at the end of the 4th preceding year or 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 of 31.03.2023 or 31.03.2023, whichever is lower).

What happens to PPF account after 15 years?

After 15 years of the maturity period, investors can continue their accounts with or without deposits.  

How to get over Rs 95,000 income a month from PPF?

To generate over Rs 95,000 a month from PPF one has 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 31 years?

In 31 years, the total investment will be Rs 46,50,000, the estimated interest will be Rs 1,20,58,575, and the estimated corpus will be Rs 1,67,08,575.

What is next step after 31 years of investment?

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

What will be your interest amount?

At a 7.1 per cent interest rate, the interest in a year will be Rs 13,92,381, which will be equal to Rs 98,859 a month. 

Also read: PPF for Regular Income: How to earn over Rs 80,000/month tax-free income from Public Provident Fund?

(Disclaimer: Our calculations are projections and not investment advice. Do you own due diligence or consult an expert for financial planning)