PPF For Regular Income: How you can withdraw Rs 12.37 lakh/year tax-free income from PPF at 50, create Rs 74 lakh corpus by 55

A PPF account can be opened in a post office or a bank. The account can be opened with a minimum deposit of Rs 500. An individual or a guardian on behalf of a minor can also open a PPF account. The scheme offers a 7.1 per cent interest rate compounded yearly.

The minimum deposit in a financial year is Rs 500, while the maximum is 1.50 lakh. One needs to deposit a minimum of Rs 500 to continue their PPF account. 

The first withdrawal in a PPF account is not possible before 5 years, excluding the year of account opening. For an account opened in May 2025, the first withdrawal is possible in May 2031. The amount of withdrawal can be 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.

The account matures in 15 years. At that stage, the account holder has 3 options, about which they need to inform the bank or the post office.  They can either close the account and withdraw the entire corpus.

 

They can take an extension of 5 years and continue their account without depositing any amount. They will keep getting interest in that way, but only 1 extension will be allowed in such a case. If they do so, they can withdraw the entire amount any time.

They can take unlimited extensions of 5 years each if they keep depositing in their PPF account. They will get interest on their investment and can also avail all benefits that they can during the pre-maturity period. If they do so, they can withdraw up to 60 per cent of their corpus at the time of maturity in the block of 5 years. However, in such a situation, only 1 withdrawal is allowed in a financial year.

In our calculations, we will show how a 25-year-old can create a PPF corpus with a Rs 1.50 lakh/year investment for 25 years that can enable them to withdraw nearly Rs 12.37 lakh a financial year for 5 years, and after withdrawing that amount, the remaining corpus will be over Rs 74 lakh, which they can use for their other financial goals or to get a lifelong regular income. 

In 15 years, the total investment will be Rs 22,50,000, estimated interest will be Rs 18,18,209, and the estimated maturity will be Rs 40,68,209. At this stage, the investor can extend their account for 5 years and keep investing Rs 1.50 lakh/year for 5 years.

In 20 years, the total investment will be Rs 30,00,000, and the estimated interest will be Rs 36,58,288, and the estimated corpus will be Rs 66,58,288. 

In 25 years, the total investment will be Rs 37,50,000, estimated interest will be Rs 65,58,015, and the estimated corpus will be Rs 1,03,08,015. At this stage, the investor can take another extension and deposit just Rs 500 a year to continue their account. 

During the extension period, since one can withdraw up to 60 per cent of the corpus at the time of maturity in the 5-year block, they can withdraw up to Rs 61,84,809 in the next 5 years with a maximum of 1 withdrawal each financial year. 

If they decide to withdraw an equal amount every year, they can withdraw an estimated tax-free yearly amount of Rs 12,36,961.8. If one starts the PPF investment process at 25 years of age, they can get this income starting from 50 years.

Since the investor will keep getting the interest on the rest of the amount, the corpus value, despite withdrawing the yearly amount of around Rs 12.37 lakh, will be Rs 74,00,438.14. 

The long-term PPF investment can help one grow their corpus faster because of the compound growth of their investment. If the investor has a long-term investment horizon, not only may they use it as a regular source of income, but they can also create a sizeable corpus.