PPF For Regular Income: How can you get Rs 85,000, Rs 91,000 and Rs 99,000 a month tax-free income from Public Provident Fund?
Public Provident Fund (PPF) is a small savings scheme that allows any residents of India, including salaried, self-employed, and pensioners to invest in this popular investment scheme for retirement planning. It currently offers an interest rate of 7.1%, unchanged since April 2020.
Established under the Public Provident Fund Act of 1986, the PPF scheme is designed to provide guaranteed returns to individuals along with tax benefits under section 80C of the Income Tax Act, of 1961. Individuals can open a PPF account at a post office or bank with a minimum investment of Rs 500. Let’s understand how can an individual get Rs 85,000, Rs 91,000, and Rs 99,000 a month tax-free income from Public Provident Fund.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
What is Public Provident Fund (PPF)?
PPF is a retirement-focused scheme that offers guaranteed returns and tax benefits under Section 80C of the Income Tax Act, 1961, to individuals. This small savings scheme is open to all individuals, including salaried and self-employed.
What is minimum and maximum deposit amount in PPF?
The minimum deposit in a financial year is 500, whereas the maximum is Rs 1.5 lakh.
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.
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.
How much can you withdraw at end of preceding year?
One 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).
How to get Rs 85,000, Rs 91,000 and Rs 99,000 income a month from PPF?
To generate Rs 85,000, Rs 91,000 and Rs 99,000 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.
Calculations for Rs 85,000, Rs 91,000 and Rs 99,000: 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.
Calculations for Rs 85,000, Rs 91,000 and Rs 99,000: 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.
Calculations for Rs 85,000, Rs 91,000 and Rs 99,000: 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 65,58,015, and the estimated corpus will be Rs 1,03,08,015.
Calculations for Rs 85,000: 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.
Calculations for Rs 85,000: 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.
Calculations for Rs 91,000: What will be PPF corpus after 30 years?
The investment in 30 years will be Rs 45,00,000, the estimated interest will be Rs 1,09,50,911, and the estimated corpus will be Rs 1,54,50,911. At this stage, they need to stop their investment.
What they need to do after this step
As per PPF rules, during the extension period, an investor can withdraw an amount once a year. At this stage, they need to withdraw just the interest amount from their corpus.
What will be yearly withdrawal?
At a 7.1 per cent interest rate, the yearly interest amount on Rs 1,54,50,911 corpus will be Rs 10,97,014.681, which is equal to Rs 91,417.89 a month.
Calculations for Rs 99,000: What will be PPF corpus after 31 years?
In 31 years, the total investment will be Rs 46,50,000, the estimated interest will be Rs 1,20,58,575, and the estimated corpus will be Rs 1,67,08,575.
What is next step after 31 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 13,92,381, which will be equal to Rs 99,000 a month.