PPF Calculator: Your Public Provident Fund account can make you crorepati! Follow this earn while you sleep strategy

PPF Calculator: A Public Provident Fund (PPF) Account is one of the most favoured long-term risk-free investments for earning individuals. A PPF account offers an interest rate of 7.1 per cent, which is also income tax free. If someone uses this investment option to the maximum, then the PPF Calculator suggests that one can earn money while sleeping and the income would be enough to even become a crorepati. 

Interestingly, one would even be able to save income tax outgo on PPF investment, interest earned and maturity amount at the time of redemption!

Speaking on the PPF interest rate and other PPF account benefits, SEBI registered tax and investment expert Jitendra Solanki said, "One can invest up to Rs 1.5 lakh in a single financial year in PPF account. It can be either one time or it can be in monthly instalments. The PPF investment is income tax exempted under Section 80C of the Income Tax Act." Solanki said that PPF account has maturity period of 15 years, but to avail indexation benefit or tax on tax benefit, it's advisable to extend the maturity period in 5 year blocks as much as one can by submitting Form 16-H at the home branch of one's bank or post office where the PPF account has been opened.

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Speaking on how the Form 16-H helps PPF account holders to earn while they sleep; Manikaran Singhal, Founder at easymoneying.com said, "Submission of form 16-H helps the investor to get PPF interest rate on the previous interest earned by the investor. One can extend the PPF account maturity for 5 years by submitting the form in the 15th year of the PPF account opening." Singhal said that an investor can open a PPF account as early as possible. by the age of 30 years, one becomes an earning individual who is conscious about one's future too. So, if someone opens a PPF account at 30 years of age then one would be able to invest for around 30 years in the same PPF account.

Assuming that someone opens a PPF account at 30 years of age — submitting Form 16-H thrice (15th, 20th and 25th year of PPF account opening), one would be able to maximise one's PPF account interest rate benefit. Let's keep PPF interest rate 2020-21 i.e. 7.1 per cent for the entire 30 years of investment, if someone invests Rs 12,500 per month or Rs 1.5 lakh per annum in one's PPF account, the Crorepati calculator suggests that one's PPF redemption money will be Rs 1,54,50,911 or Rs 1.545 crore.

During this 30 years of PPF investment, one would be getting net PPF interest of Rs 1,09,50,911 or Rs 1.095 crore while one's net investment in PPF account will be Rs 45,00,000 or Rs 45 lakh.