PPF For Rs 60,000/month Regular Income: How to earn tax-free amount post retirement through Public Provident Fund

PPF for Regular Income: Are you planning for your retirement and searching for a safe and secure investment option that also guarantees regular income post-retirement? If yes, then PPF can be a useful choice for you. It is a government-backed long-term savings scheme that not only offers fixed returns but also provides tax-free benefits. 

Still wondering, how it is possible? What is PPF? What is its interest rate, and how much money will it generate? How can you build a Rs 1 crore tax-free corpus along with Rs 60,000 per month interest income through this scheme? In this write-up, we will explain, through calculations, how you can build a Rs 1 crore tax-free corpus and earn Rs 60,000 per month through this scheme

What is PPF?

- It is a government-backed long-term savings scheme.
- It offers fixed returns 
- It also provides tax-free benefits under 80C of the Income Tax Act of 1961. 

Investment Limit and Maturity Period

- An individual can invest up to Rs 1.5 lakh (maximum) per year in PPF.
- Currently, the maturity period of PPF is 15 years.
- Individuals, after the first 15 years, can renew the scheme for an indefinite time duration in 5-year blocks.

Interest Rate

Currently, PPF is offering a 7.1 per cent per annum interest rate.

Tax Benefits of PPF

The PPF scheme follows an EEE tax structure, which means that an annual investment is eligible for a tax deduction. However, the interest earned is tax-free. Additionally, the maturity corpus is also tax-free when withdrawn which includes both principal and interest.

How to Build a Rs 1 Crore Retirement Corpus Through PPF?

If your goal is to accumulate a retirement corpus of Rs 1 crore, then you need to invest in PPF for 25 years, 15 years of the mandatory investment period, and two extensions of 5 years each after maturity.

How Much Corpus Can You Generate After 25 Years?

Now, let's suppose you are investing Rs 1.5 lakh every year in the scheme for 25 years, then, according to the calculations, your total investment will be Rs 37,50,000. At an interest rate of 7.1 per cent per annum, the total interest amount earned will be Rs 65,58,015. Adding both, the final corpus would become Rs 1,03,08,015.

Next step: What to do after 25 years?

Even after completing the 25-year investment period, you do not need to withdraw money from your PPF account. The corpus is growing, and you can choose:

- Leave money in PPF: If you do not withdraw money, your funds will keep earning interest.
- Annual withdrawal: You can also choose to withdraw the entire amount or withdraw only interest on an annual basis.

How to earn 60,000/month from PPF interest?

If you keep your entire corpus of Rs 1,03,08,015 in PPF account, you will earn interest of Rs 7,31,869 (at 7.1 percent interest rate) annually. 

- Monthly Income: If you divide the annual interest of Rs 7,31,869 for 12 months, then you will get around Rs 60,989 per month.

- This monthly income arises without touching the major amount, and the full corpus of Rs 1,03,08,015 will remain in your account.