PPF For Regular Income: How can you generate Rs 56,000/month tax-free income from Public Provident Fund?
The Public Provident Fund (PPF) is a popular retirement investment option that offers guaranteed returns over the long term, along with tax benefits. With a minimum investment of just Rs 500, PPF is an easy way to start saving for your retirement.
The Public Provident Fund (PPF) is a savings scheme that offers guaranteed returns and tax benefits. The current interest rate is 7.1 per cent. You can open a PPF account at a post office or bank with a minimum deposit of Rs 500. A well-planned investment in PPF can provide a significant tax-free income, exceeding Rs 56,000 per month.
Photos source: Pixabay/Representational
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
What is PPF?
The Public Provident Fund (PPF) is a safe and secure way to save for your future. You can open a PPF account at a bank or post office. It's a great option because it offers guaranteed returns and tax benefits. Anyone can open an account, whether you're working, self-employed, or a parent wanting to save for your child's future.
What is maturity period of PPF account?
The Public Provident Fund (PPF) account matures in 15 years. But you don't have to close it then. You can extend it for another 5 years, and then another 5 years, and so on - for as long as you want.
What is minimum PPF investment?
To keep your PPF account active, you need to deposit a minimum of Rs 500 in a year. The maximum amount you can deposit in a year is Rs 1.5 lakh.
Tax benefits in PPF
When you invest in PPF, you can claim tax benefits on deposits up to Rs 1.5 lakh. Plus, the interest you earn and the final amount you receive are completely tax-free.
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 opened 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.
How much can you withdraw at end of preceding year?
When you withdraw money from your PPF account, you can take out up to 50 per cent of the balance. But, there's a catch - the balance is calculated from 4 years ago, or the previous year, whichever is less.
What happens to PPF account after 15 years?
After your PPF account matures in 15 years, you have two options: you can either keep adding money to it or just let it be, without making any further deposits.
How to get Rs 56,000 a month from PPF?
To generate Rs 56,000 a month from PPF one has to begin with a 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.
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 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.
What is next step after 24 years of investment?
After 15 years, you can start taking out the interest earned on your entire investment. If you extend your account, you can withdraw the interest amount once every year.
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.