PPF Calculator: Your Public Provident Fund account can make you a crorepati; here is how

PPF Calculator: The Public Provident Fund (PPF) is widely considered one of the long-term investment tools. If a PPF account holder has chosen the old income tax slabs, then it will have the luxury to claim tax exemption on up to Rs 1.5 lakh investment in the Public Provident Fund account under Section 80C of the Income Tax Act 1961. As per the tax and investment experts, PPF account gets matured after 15 years, but rather going for the PPF withdrawal one should extend it for the next five years by submitting Form 1-H. They said that a PPF account can be extended for five years after the maturity and there is no bar on the number of times one can extend it. 

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Commenting on the PPF account, SEBI registered tax and investment expert Jitendra Solanki said, "PPF or Public Provident Fund account gets matured after 15 years but after 15 years, one can extend it for next five years by submitting the form 15H within one year of the maturity period." Solanki went on to add that PPF account extention helps the PPF account holder to avail the compounding benefit on one's PPF interest rate by making the long-term investment more deeper. 

Solanki was of the opinion that in the old income tax slab, PPF account falls under 'EEE' category means, income tax exemption on investment, PPF interest earned and the PPF maturity amount. However, if a PPF investor is in a new income tax slab, he or she would get tax benefit on the PPF interest earned and PPF maturity amount. So, extending one's PPF account for the next five years will give compounding benefits along with a higher income-tax-free maturity amount.

Going by Solanki's advise the PPF calculator suggests that if someone decides to invest Rs 12,500 per month or Rs 1.5 lakh per annum, then after 15 years of the maturity period, one would get Rs 43,60,517 while after exteding it for the next five years, the PPF maturity amount after 20 years would be Rs 73,25,040. 

As an investor would retire after working for at least 25 yeras, it is advisable for the PPF account holder to hold one's PPF account for at least 25 years as after 25 years, one's Rs 12,500 per month or Rs 1.5 lakh per annum would become Rs 1,16,60,769. 

So, by going through the PPF calculator, it's advisable for the investors to go deep and avail compounding benefits before going for the PPF withdrawal.