PPF for Regular Income: How to plan for over Rs 7 lakh a year tax-free income?

Most people are unaware that they can use their Public Provident Fund (PPF) investment to generate regular income. Yes, you read that right! PPF is a government-backed small savings scheme with a lock-in period of 15 years, which can help you generate a regular income. Let's 

Anamika Singh | May 13, 2025, 11:51 AM IST

Public Provident Fund (PPF) is a popular investment scheme for a number of reasons. The prominent reason is tax-free income. PPF contributions made every year are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. The deductions can be claimed by anyone up to the same limit. The deduction limit for PPF deposits is Rs 1.5 lakh annually. 

Currently, the Public Provident Fund is offering interest at 7.1 per cent with yearly compounding. You can invest in a PPF account for a minimum of 15 years and avail any number of 5-year extensions eventually to avail tax benefits of up to Rs 1.5 lakh a financial year under Section 80C of the Income Tax Act and earn a tax-free amount on maturity.

In this article, let’s take a look at a context where you can invest your funds wisely to plan for over Rs 7 lakh a year tax-free income. 

Photo source: Pixabay/Representational

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What is PPF?

What is PPF?

Public Provident Fund is considered a secure way to save for your future. It allows you to invest up to 1.5 lakh in a year. The PPF offers guaranteed returns and tax benefits under Section 80C of the Income Tax Act of 1961. Anyone can open an account, whether you're working, self-employed, or a parent wanting to save for your child's future.

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What is minimum PPF investment?c

What is minimum PPF investment?c

To keep your PPF account active, you need to deposit a minimum of Rs 500 per year. The maximum amount you can deposit in a year is Rs 1.5 lakh.

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Tax benefits in PPF

Tax benefits in PPF

When you invest in PPF, you can claim tax benefits on deposits up to Rs 1.5 lakh annually. Plus, the interest you earn and the final amount you receive are completely tax-free.

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Can you withdraw PPF amount before maturity period of 15 years?

Can you withdraw PPF amount before maturity period of 15 years?

You can withdraw money from your PPF account, but only after 5 years from when you subscribed for it. And, you can only make one withdrawal in a year. For example, if you opened your account in 2024-25, you can withdraw money from 2030-31 onwards.

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What happens to PPF account after 15 years?

What happens to PPF account after 15 years?

After your PPF account matures in 15 years, you have two options: you can opt for an extension of 5 years and keep adding money to it, or just let it be, without making any further deposits. 

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How to plan for over Rs 7 lakh a year from PPF?

How to plan for over Rs 7 lakh a year from PPF?

To generate over Rs 7 lakh from PPF, one has to begin with a Rs 1.50 lakh investment every year and continue it till the maturity period of 15 years. Later, you have to opt for an extension of 5 years and continue it until you reach your target corpus. 

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What will be PPF corpus after 15 years?

What 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.

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What will be PPF corpus after 20 years?

What will be 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. 

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What will be PPF corpus after 24 years?

What will be PPF corpus after 24 years?

In 24 years, the total investment will be Rs 36,00,000, the estimated interest will be Rs 58,74,664, and the estimated corpus will be Rs 94,74,664.

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What is next step after 24 years of investment?

What is next step after 24 years of investment?

At the end of 24 years, your PPF maturity amount will have reached approximately Rs 94.75 lakh, with a total investment of Rs 36 lakh and interest of about Rs 58.75 lakh, calculations show. After 24 years, you can start taking out the interest earned on your entire investment. 

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What will be your interest amount?

What will be your interest amount?

At a 7.1 per cent interest rate, the interest in a year will be Rs 7,89,555, which will be equal to Rs 56,058 a month.

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