PPF Calculator: Your Public Provident Fund account can make you a crorepati; use this trick, say experts

PPF Calculator: Public Provident Fund (PPF) account is one of the most preferred long-term investment tools since it is a government-backed risk-free investment option for all. Apart from this, a PPF account holder gets income tax exemption under 'EEE' category, means tax exemption on PPF rate of interest incurred throughout the investment period, tax-free PPF maturity amount and tax exemption on up to Rs 1.5 lakh investment in PPF account in a particular financial year.

So, those investors who have a low risk appetite can open a PPF account and go as long as they can, say tax and investment experts. They are of the opinion that if a person starts investing in PPF at the age of 30, then they will be able to invest for around 30 years till they retire.

Speaking on how a PPF account holder can continue investing for 30 years; SEBI registered tax and investment expert Jitendra Solanki said, "PPF account has a maturity period of 15 years but one can extend it for five years by submitting Form-H within one year of maturity. In that case, one can continue to invest in one's PPF account and avail PPF interest." 

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He said that one can extend PPF maturity for as long as one wants. So, to invest in a PPF account for 30 years, one will have to submit Form-H three times (15h year, 20th year and 25th year of PPF account opening).

PPF calculator on 15-year investment

Using the PPF calculator, if a person invests in PPF account for 15 years in normal circumstances, then assuming current PPF interest rate of 7.1 per cent, if an investor invests Rs 12,500 per month, then the investor will be able to get PPF maturity amount of Rs 40,68,209.

PPF maturity after 30 years

However, if a person decides to go long and continue investing in the PPF account as he or she has been investing for the last 15 years, his or her PPF maturity amount after 30 years will be Rs 1,54,50,911 or Rs 1.54 crore.

Highlighting upon the benefit of Rs 12,500 per month investment in PPF account, another SEBI registered tax and investment expert Manikaran Singhal said, "By investing Rs 12,500 per month, one would be able to claim income tax exemption on the entire annual investment as it would add up Rs 1,50,000 in one financial year. Apart from this, one would be exempted from income tax outgo on PPF interest rate incurred in one's PPF account and from the PPF maturity amount as well." 

Way to maximise PPF rate of interest

However, Singhal advised PPF account holders to invest in between 1st to 4th date of each month as it would help PPF account holders to get PPF interest for the same month. "According to the PPF rules, if a person invests from 1st to 4th date of the month, then he or she will be eligible for PPF interest rate for the same month," said Singhal.

How this Rs 1.54 cr will be useful post-retirement

Singhal said that post-retirement, one will have Rs 1.54 crore in one's PPF account, that will incur around Rs 10.97 lakh annual PPF interest att curent 7.1 per cent rate of interest. This amount of Rs 10.97 lakh PPF interest per annum will be a good amount for the investor to meet one's financial requirements post-retirement.