PPF Calculator: Interest rate slashed but your Public Provident Fund can still make you a crorepati; try this trick
PPF Calculator: Though PPF interest rate has been slashed, tax and investment experts are of the opinion that PPF account is still best investment tool for a salaried person.
PPF Calculator: Public Provident Fund or PPF is one of the most preferred long-term investment tools. Though, the Government of India (GoI) has slashed PPF interest rate to 7.1 per cent from 7.9 per cent for April to June 2020 quarter, tax and investment experts are of the opinion that PPF account is still best investment tool for a salaried person. What they suggest is to continue extending the PPF account till the person is earning. They said that if a person invests Rs 1.5 lakh in PPF and extends PPF account tenure on two occasions then they will be able to invest in their PPF account for 25 years. And after 25 years of PPF account, the PPF balance would be a whopping Rs 1,03,08,015.
Speaking on the trick that PPF account holder needs to use while investing, Balwant Jain, a Mumbai-based tax and investment expert said, "PPF account has a maturity of 15 years. But, one can extend it for next five years by submitting Form-H to the bank, post office or any other institution where one has opened the PPF account. However, one must remember that if someone want to continue investing in PPF after 15 years, one will have to submit Form-H within one year of the maturity." Jain advised PPF account holder to opt for continued investment mode in the PPF account extension (if they are able to continue investing).
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Elaborating upon the benefit of Rs 1 crore use after 25 years, SEBI registered tax and investment expert Jitendra Solanki said, "PPF account gives you post-tax return as it's income is tax exempted." So, after 25 years of PPF investment, the PPF account holder may retire of think of retirement. At that time this huge PPF balance will help the investor garner around Rs 7.31 lakh per annum as interest (taking current Rs 7.1 per cent PPF interest rate in calculation). This money is exempted from the income tax means one will have a whopping Rs 7.31 lakh to spend for their ;post-retirement financial requirements keeping the PPF balance after 25 years intact in their PPF account.
So, even after PPF interest rate is cut down to 7.1 per cent from 7.9 per cent, if someone uses it wisely, PPF account is still a better option to lead a life with full financial freedom.
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