PPF For Regular Income: How to earn over Rs 51,000/month tax-free with Public Provident Fund?
Discover how disciplined investing in the Public Provident Fund (PPF) can help you build a tax-free corpus and generate over Rs 51,000/month in secure, risk-free income post-retirement.
The Public Provident Fund (PPF) is a trusted savings scheme offering guaranteed returns, tax benefits and a secure way to plan for retirement. This corpus can generate a steady, risk-free monthly income of over Rs 51,000 through interest alone. Read on to learn how PPF works, its benefits and strategies to maximise returns.
Introduction to Public Provident Fund (PPF)
- The Public Provident Fund (PPF) is a government-backed savings scheme offering guaranteed returns and tax benefits.
- Currently, the interest rate on PPF is 7.1%.
- It is accessible to all individuals, including salaried employees, business owners and even minors (through guardians).
Key Features of PPF
- Minimum and Maximum Investment Limits
- Minimum deposit per financial year: Rs 500.
- Maximum deposit per financial year: Rs 1.5 lakh.
Maturity Period
- Initial maturity period: 15 years.
- Option to extend in unlimited 5-year blocks after maturity.
Tax Benefits
- Contributions of up to Rs 1.5 lakh are eligible for tax deductions under Section 80C.
- Both interest earned and the matured corpus are tax-free.
Withdrawal Rules Before Maturity
Partial Withdrawal After 5 Years
Allowed once a financial year after 5 years (including the year of account opening).
Example: If the account was opened in 2023-24, withdrawals can begin in 2029-30.
Withdrawal Limit
Up to 50% of the balance at the end of the 4th preceding year or the preceding year, whichever is lower.
What Happens After Maturity?
Options Post 15 Years
- Continue the account with or without deposits.
- Extend in 5-year blocks for higher long-term benefits.
How to Get Over Rs 51,000 Monthly Income?
Investment Strategy
Invest Rs 1.5 lakh annually between April 1-5 every financial year for maximum interest benefits.
Continue investing for 15 years to build a significant corpus.
What Will Be PPF Corpus After 15 Years?
- By investing Rs 1.5 lakh annually for 15 years, the total contribution will be Rs 22,50,000.
- At an interest rate of 7.1%, the accumulated interest will be approximately Rs 18,18,209.
- The total maturity value after 15 years will be Rs 40,68,209.
What Will Be PPF Corpus After 23 Years?
- Extending the PPF account for two additional 5-year blocks with consistent annual contributions of Rs 1.5 lakh will increase the total investment to Rs 34,50,000.
- The accumulated interest over 23 years will be around Rs 52,46,558, significantly boosting the corpus.
- The total maturity value after 23 years will be Rs 86,96,558.
How to Earn Monthly Income After 23 Years?
- After 23 years, stop contributing and withdraw only the annual interest on the corpus of Rs 86,96,558.
- The yearly interest at a 7.1 per cent interest rate will amount to approximately Rs 6,17,455.62.
- This translates to a stable, tax-free monthly income of Rs 51,454.63.