Power of Rs 1,50,000 PPF Investment: How many years will it take to generate over Rs 90,000/month tax-free income from Public Provident Fund?

PPF is a long-term government-backed savings scheme in India. Public Provident Fund offers E-E-E status, which means tax exemption on investment, interest, and maturity under section 80C. 

PPF offers guaranteed returns. It offers tax benefits under Section 80C of the Income Tax Act. PPF is open to all individuals, including those who are employed or self-employed. Parents or guardians can open a PPF account for minors.

While the maturity period of a Public Provident Fund (PPF) account is 15 years, subscribers or account holders can make partial withdrawals before maturity. Here's what you need to know:

You can make one withdrawal per financial year after completing 5 years from the date of account opening. Note that the 5-year lock-in period includes the year of account opening. For example, if you opened your PPF account in 2024-25, you can make your first withdrawal in 2030-31 or later.

When making a withdrawal from your Public Provident Fund (PPF) account, there are specific limits to keep in mind:

You can withdraw up to 50 per cent of the balance at the end of the 4th preceding year or the end of the preceding year, whichever is lower. For example, if you are making a withdrawal in the financial year 2024-25, you can withdraw up to 50 per cent of the balance as of March 31, 2023, or March 31, 2024, whichever is lower.

After completing the initial 15-year maturity period, you have the flexibility to manage your Public Provident Fund (PPF) account as follows: You can choose to continue your account with or without making further deposits. This allows you to extend the benefits of your PPF account beyond the initial maturity period.

To generate over Rs 90,000/month 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 can extend the account for blocks of 5 years each for maximum return. 

It will approximately take 30 years to reach this target corpus.

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.

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. 

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.

In 30 years, the total investment will be Rs 45,00,000, the estimated interest amount will be Rs 1,09,50,911, and the estimated corpus will be Rs 1,54,50,911. 

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.

At a 7.1 per cent annualised return, the interest in a year will be Rs 12,87,575, which will be Rs 91,417 a month.