PPF For Regular Income: How to get Rs 60,000/month tax-free income from Public Provident Fund?

The Public Provident Fund (PPF) is a well-known savings scheme that provides guaranteed returns and tax benefits. The current interest rate for PPF is 7.1 per cent, which has stayed the same since April 2020. Anyone can open a PPF account at a bank or post office with a minimum deposit of Rs 500. This scheme helps people grow their savings over time. Now, let’s find out how a person can earn Rs 60,000 per month from PPF.

What is Public Provident Fund?

The Public Provident Fund (PPF) is a savings plan for retirement that people also use to spread out their investments. You can open a PPF account at a bank or post office. It gives guaranteed returns and tax benefits under Section 80C of the Income Tax Act, 1961, to individuals. Anyone can invest in this small savings scheme, including working people and those who run their businesses. A parent or guardian can also open a PPF account for a minor.

What is maturity period of 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. 

What is minimum and maximum PPF investment?

The minimum deposit in a financial year is 500, whereas the maximum is Rs 1.5 lakh.

Tax benefits in PPF

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 amount before maturity period of 15 years?

A PPF account holder is allowed to take 1 withdrawal during a financial year after 5 years, it does include the year of account opening. 

How much can you withdraw at end of preceding year?

You can withdraw up to 50 per cent of the balance as of the end of the 4th preceding year or the preceding year, whichever is lower. 

What happens to PPF account after 15 years?

After 15 years of the maturity period, investors can continue their accounts with or without deposits. 

How to get Rs 60,000 income/month from PPF?

To generate Rs 60,000 a month from PPF one has to begin with a Rs 1.5 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. 

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.

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. 

What 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 is next step after 25 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 8,59,001, which will be equal to Rs 60,989 a month.

(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)