PPF For Regular Income: How you can get Rs 78,000 a month tax-free income through Public Provident Fund investment?

PPF is a popular small savings, retirement-focussed investment scheme where investors can open an account in a post office or a bank.

Post offices and banks offer the same PPF interest rate at 7.1 per cent compounded quarterly. The interest is credited to the account at the end of each financial year. To get the maximum benefit from the interest rate, a PPF account holder should deposit the lump sum amount from April 1-5 every financial year.

A PPF account can be opened with a minimum deposit of Rs 500. The same amount a financial year is required to maintain the account. The maximum deposit limit in a financial year is Rs 1.50 lakh. It can be deposited as a lump sum or in unlimited instalments.

The maturity period for the PPF account is 15 years. After that, the account holder can extend the account for unlimited blocks of 5 years each.

It is not mandatory to invest during PPF account extensions. But if one wants, they can invest up to Rs 1.50 lakh in a financial year.In either case, they will get interest income.

Investors on deposits up to Rs 1.50 lakh a financial year can get tax benefits under Section 80C of the Income Tax Act, 1961. The interest earned and the maturity amount are also tax-free.

For that one needs to exhaust the deposit limit of PPF. They need to invest Rs 1.50 lakh lump sum in the beginning of each financial year. To get the maximum benefit of the PPF investment, they need to deposit it between April 1-5 every financial year. But for how many years? See calculations to know that!

First of all, an investor has to deposit Rs 1.50 lakh in a financial year for 15 years. In 15 years, the total investment will be Rs 22,50,000, the estimated interest will be Rs 18,18,209, and the estimated corpus will be Rs 40,68,209. From there, the PPF investor needs to take 3 extensions.

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

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. The investor needs to take another 5-year extension and keep investing for 3 more years.

The total investment in 28 years will be Rs 42,00,000, the estimated interest will be Rs 89,80,178, and the estimated corpus will be Rs 1,31,80,178. 

As per PPF extension rules, an investor can withdraw the interest amount once a year. Here the investor just needs to withdraw the interest generated.

At a 7.1 per cent interest rate, a Rs 1,31,80,178 retirement corpus can generate an estimated interest amount of Rs 9,35,792.638. On a monthly basis, it will be equal to an estimated Rs 77,983.