PPF for Regular Income: How to earn over Rs 80,000/month tax-free income from Public Provident Fund?
Did you know there is a savings scheme that not only helps you build a retirement fund but also offers guaranteed returns and tax benefits? Yes, we are talking about the Public Provident Fund (PPF). It is open to all Indian residents, whether you’re salaried, self-employed, or retired. And the best part? You can start with just Rs 500. Thus, let’s find out how can you generate over Rs 80,000/month tax-free income with PPF.
The Public Provident Fund (PPF) is a well-known savings scheme that offers guaranteed returns and tax benefits. It currently has a fixed interest rate of 7.1 per cent since April 2020. You can open a PPF account in a post office or a bank with just Rs 500. But did you know that with smart planning, you can earn over Rs 80,000 per month from PPF? Let’s find out how.
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(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning)
What is Public Provident Fund?
The Public Provident Fund (PPF) is a great way to save for retirement and diversify your investments. You can easily open a PPF account at a bank or post office. The best part is that it offers guaranteed returns, so you know exactly how much you will get, and tax benefits that help you save on taxes. Plus, it's open to everyone, whether you are doing a job or running your own business. Even minors can have a PPF account, which their parents or guardians can open for them.
What is the lock-in period of a PPF account?
The maturity period is 15 years. After 15 years, the account holders can extend the account for unlimited blocks of 5 years each.
PPF investment limits: How much can you invest?
The minimum deposit in a financial year is 500, whereas the maximum is Rs 1.5 lakh.
PPF Tax Benefits: How much can you save?
Contributions up to Rs 1.5 lakh in PPF are eligible for tax deductions under Section 80C, the interest earned and the corpus are also tax-free.
Can you withdraw PPF money before 15 years?
A PPF account holder is allowed to take 1 withdrawal during a financial year after 5 years, please note it does include the year of account opening.
PPF Withdrawal Limit: How much can you take out?
You can withdraw 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.
What happens to your PPF account after 15 years?
After 15 years of the maturity period, investors can continue their accounts with or without deposits.
How to get over Rs 80,000 income a month from PPF?
To generate over Rs 80,000 a month from PPF one has to begin with Rs 1.50 lakh investment every financial year and continue it till the maturity period of 15 years. To get the maximum benefit of interest, the investment should be made between April 1-5 every financial year.
How much 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.
How much will be your 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.
How much will be PPF corpus after 25 years?
In 25 years, the total investment will be Rs 37,50,000, the estimated interest will be Rs 99,26,621, and the estimated corpus will be Rs 1,03,08,015.
What will be your 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, investors can start withdrawing interest on the entire corpus. During extensions, the account holder is allowed to withdraw the interest amount once a year.
What will be your interest amount?
At a 7.1 per cent interest rate, the interest in a year will be Rs 10,13,640, which will be equal to Rs 85,000 a month.