The Public Provident Fund (PPF) is a government-backed savings scheme that enables people to save money for the future, safely and reliably. You can use the Public Provident Fund for portfolio diversification as it offers a different asset class compared to stocks or mutual funds. It simply means, by including PPF in a portfolio alongside other investment options like stocks or mutual funds, investors can diversify their investments and reduce overall risk. Thus, let’s find out how you can earn over Rs 60,000/month tax-free income from the Public Provident Fund.
What is a Public Provident Fund (PPF)?
The Public Provident Fund (PPF) is a savings scheme for retirement and portfolio diversification. You can open a PPF account at a bank or post office, which offers guaranteed returns and tax benefits under Section 80C of the Income Tax Act, making it a great way to save for the future.
What is maturity period of PPF Account?
The PPF account matures in 15 years. After that, you can extend it in 5-year blocks.
What are minimum and maximum investment limits for PPF Account?
The minimum deposit in a year is Rs 500, whereas the maximum deposit in a year is Rs 1.5 lakh.
Tax benefits in PPF
Contributions up to Rs 1.5 lakh in PPF are eligible for tax deductions under Section 80C, the interest earned and the corpus are also tax-free.
Can you withdraw PPF amount before 15-year maturity period?
A PPF account holder is allowed to take 1 withdrawal during a financial year after 5 years, please note it does include the year of account opening. (if the account is open during 2023-24, the withdrawal can be taken during or after 2029-30).
How much can you withdraw at end of preceding year?
You can withdraw 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 2024-25, up to 50% of the balance.
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 60,000 income a month from PPF?
To generate over Rs 60,000 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. After that, you can extend it in 5-year blocks.
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 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 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 PPF corpus after 26 years?
In 26 years, the total investment will be Rs 39,00,000, the estimated interest will be Rs 73,00,534, and the estimated corpus will be Rs 1,12,00,534.
What is next step after 26 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 9,33,377, which will be equal to Rs 66,269 a month.
DISCLAIMER: Investments carry risk; seek professional guidance
