PPF For Regular Income: Can you get Rs 85,000 a month, tax-free income from Public Provident Fund?

A Public Provident Fund (PPF) is a popular small savings scheme that offers long-term guaranteed returns and tax benefits. The current interest rate for the PPF is 7.1 per cent, it has remained unchanged since April 2020. Individuals can open a PPF account in a post office or a bank with a minimum investment of Rs 500. Let’s understand how can an individual get Rs 85,000 a month from PPF.

What is PPF

Public Provident Fund is a retirement-centric scheme that investors also use for their portfolio diversification. One can open a PPF account in a bank or post office. It also offers guaranteed returns and tax benefits under Section 80C of the Income Tax Act, 1961, to individuals. It is open to all individuals, including salaried and self-employed. A minor's PPF account can be opened by a parent or guardian.

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 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, please note it does include the year of account opening. (if the account is open during 2023-24, the withdrawal can be taken during or after 2029-30).

How much can you withdraw at end of preceding year?

You can withdraw up to 50 per cent of the balance at the credit at the end of the 4th preceding year or at the end of the preceding year, whichever is lower. (i.e., withdrawal can be taken in 2023-24, up to 50% of the balance as of 31.03.2023 or 31.03.2023, 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 85,000 income a month from PPF?

To generate Rs 85,000 a month from PPF one has to begin with 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 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 will be PPF corpus after 29 years?

In 29 years, the total investment will be Rs 43,50,000, the estimated interest will be Rs 99,26,621, and the estimated corpus will be Rs 1,42,76,621.

What is next step after 29 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 10,13,640, which will be equal to Rs 85,000 a month.

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