PPF for Regular Income: How can you generate over Rs 11 lakh/year tax-free income from Public Provident Fund?

Having a source of regular income during your golden days is the best planning one can come up with. When you hit a certain age where you stop working, a source of regular income is what anyone would look up to. Therefore, let’s find out how you can generate over Rs 11 lakh/year tax-free income from the Public Provident Fund.

Find out how you can generate over Rs 11 lakh/year tax-free income from the Public Provident Fund. Image source: Pixabay/Representational

Public Provident Fund is one of the popular investment schemes with guaranteed returns and tax benefits under section 80C of the Income Tax Act. Investments up to a maximum of Rs 1.5 lakh per year in a PPF account are eligible for a tax deduction. Also, after saving for 3 years in a PPF account, you can avail a loan against your invested amount. On that account, let’s quickly understand how you can generate over Rs 11 lakh/year tax-free income from PPF.

Also read: PPF Calculation: How much will you earn in 20 years by investing Rs 5,000, Rs 9,000, and Rs 10,000 monthly in Post Office Public Provident Fund?

Understanding Public Provident Fund

PPF is a long-term government backed savings scheme which can also be used to diversify your investments. The interest rate on PPF is fixed by the government and is reviewed quarterly. Anyone can open an account, whether you're working, self-employed, a student, or even a parent or guardian opening one for your child.

What is the maturity period of PPF account?

A PPF account takes 15 years to mature. After which it can be extended in blocks of 5 years.

How much can you invest in PPF?

You can invest a minimum of Rs 500 to a maximum of Rs 1.5 lakh in a PPF account every year.

What are tax benefits of PPF?

Investing in PPF not only saves you money but also reduces your tax liability. You can claim tax deductions on investments up to Rs 1.5 lakh. Plus, the interest you earn and the amount you withdraw are completely tax-free.

PPF withdrawal rules: Can you withdraw from PPF before 15 years?

A PPF account holder is allowed to take 1 withdrawal during a financial year after 5 years, please note that it does not include the year of account opening. (If the account is open during 2023-24, the withdrawal can be taken during or after 2029-30).

PPF withdrawal limit: How much can you withdraw?

You 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).

PPF maturity: What to do after the completion of 15 years?

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

PPF investment strategy: Earn over Rs 11 lakh/year

To generate Rs 11 lakh/year from PPF, you have to begin with a Rs 1.50 lakh investment every year and continue it till the maturity period of 15 years. After which it can be extended in blocks of 5 years.

PPF investment: How much will you get 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.

PPF corpus after 20 years: How much will be estimated maturity amount

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.

PPF corpus after 25 years: How much will be estimated maturity amount

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.

PPF corpus after 27 years: Estimated maturity value

In 27 years, the total investment will be Rs 40,50,000, the estimated interest will be Rs 81,06,422, and the estimated corpus will be Rs 1,21,56,422.

What will be 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, account holders can start withdrawing interest on the entire corpus. During extensions, the account holder is allowed to withdraw the interest amount once a year.