PPF Calculator: How one can get Rs 51,500 a month from PPF investment; see calculations to know
PPF Calculator: Public Provident Fund (PPF) is used to make tax-free retirement corpus but it can also be used to get regular income a month. The income will also be tax-free.
PPF Calculator: Public Provident Fund (PPF) is one of the popular fixed interest scheme which is run by banks and post office. The scheme provides tax-free income. The amount invested and the interest earned are also tax-free. Investors can also use PPF investment for the diversification of their portfolio as it can form their debt portion. The guaranteed return scheme provides compound interest which, if, accumulated, in the long can help one build over 1 crore corpus. One can withdraw the corpus after 15 years of lock-in period. But if they not only can extend their PPF account for unlimited 5 years of blocks, but they can also withdraw interest annually.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult and expert for financial planning.)
How PPF works
An investor can make a lump sum investment in a financial year or invest in phases. The investor gets 7.1 per cent interest on it which is compounded early.
Minimum and maximum yearly PPF investment
The minimum investment in a financial year is Rs 500, while the maximum is Rs 1.50 lakh.
PPF tax benefits
Investors can get tax benefits on deposits up to Rs 1.50 lakh in a financial year under Section 80C of the Income Tax Act, 1961. The interest earned and the corpus amount are also tax-free.
PPF account extension
The account can extended after 15 years with or without investments. On maturity, an investor gets 3 options
1. They can take maturity payment by submitting account closure form along with passbook at concerned Post Office.
2. They can retain maturity value in their account further without deposit, the PPF interest rate will be applicable and the payment can be taken any time or can take 1 withdrawal in each FY.
3. They can extend their account for further block of 5 years and so on (within 1 year of maturity) by submitting prescribed extension form at the concerned post office.
4. In the extended account with deposits, 1 withdrawal can be taken in each financial year subject to maximum limit 60 per cent of the balance credit at the time of maturity in the block of 5 years.
PPF withdrawal
A PPF account holder also gets the option to take 1 withdrawal during a financial after 5 years, excluding the year of account opening.
PPF account premature closure
Premature closure shall be allowed after 5 years from the end of the year in which the account was opened in conditions such as life threatening disease of account holder, spouse or dependent children, higher education of account holder or dependent children, or change of resident status of account holder (became NRI).
PPF calculations
For our calculations, we will take the example of an account holder who invests Rs 1.50 lakh lump sum in PPF every year between April 1-5 every to get the maximum benefit of interest. They need to extend this account deposit the same amount between the same dates for 15 years.
PPF corpus after 15 years
The invested amount after 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. Then the investor needs to extend this account for 5 more years.
PPF corpus after 20 years
The invested amount after 20 years will be Rs 30,00,000, the estimated interest will be Rs 36,58,288, and the estimated maturity will be Rs 66,58,288. Then the investor needs to extend this account for 5 more years and keep investing Rs 1.50 lakh in a financial year for the next 3 years.
PPF corpus after 23 years
The invested amount after 23 years will be Rs 34,50,000, the estimated interest will be Rs 52,46,558, and the estimated maturity will be Rs 86,96,558.
How to get Rs 51,500 a month from PPF
The investor needs to stop investing in PPF after 23 years. From there, they need to withdraw only the estimated interest amount of Rs 6,17,455.62 once a year.
How to get Rs 51,500 a month from PFF
Rs 6,17,455.62 once a year will be equal to estimated Rs 51,454.63 a month.