PPF for Regular Income: How to generate over Rs 10 lakh/year tax-free income from Public Provident Fund?

The Public Provident Fund (PPF) is a popular savings scheme that offers guaranteed returns and tax benefits, with a current interest rate of 7.1 per cent. You can start a PPF account with just Rs 500 at a post office or bank. But what's exciting is that with some smart planning, you can earn over Rs 10 lakh/year tax-free income from PPF. Let's see how.

Introduction to Public Provident Fund?

PPF is a simple way to save for retirement and diversify your investments. You can easily open an account at a bank or post office. The benefits include:

• Guaranteed returns
• Tax benefits
• Open to everyone, regardless of occupation
• Even minors can have an account, opened by parents or guardians.

What is the lock-in period of a PPF account?

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

PPF investment limits: How much can you invest?

The minimum deposit in a financial year is 500, whereas the maximum is Rs 1.5 lakh.

PPF Tax Benefits: How much can you save?

Contributions up to Rs 1.5 lakh in PPF fall under tax deductions under Section 80C, the interest earned and the corpus are also tax-free.

Can you withdraw PPF amount before 15 years?

A PPF account holder is allowed to take 1 withdrawal during a financial year after 5 years, it does include the year of account opening.

PPF Withdrawal Limit: How much can you take out?

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

What happens to your 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 10 lakh/year income from PPF?

To generate over Rs 10 lakh/year from PPF one has to begin with a 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. 

How much 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.

How much 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. 

How much will be PPF corpus after 25 years?

In 25 years, the total investment will be Rs 37,50,000, the estimated interest will be Rs 99,26,621, and the estimated corpus will be Rs 1,03,08,015.

What will be your PPF corpus after 29 years?

In 29 years, the total investment will be Rs 43,50,000, the estimated interest will be Rs 99,26,621, and the estimated corpus will be Rs 1,42,76,621.

What is next step after 29 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 10,13,640. 

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