Public Provident Fund (PPF) is a great and popular savings scheme, which people often choose for retirement. But do you know that after PPF matures, you can also use it as a monthly income? Actually, PPF can be extended even after maturity, and through this you can get tax free income of up to Rs 24,000 every month. This is a special rule, by knowing which you can make your future even more secure.
PPF Rules : Facility to extend
The maturity period of Public Provident Fund (PPF) is 15 years, but even after this it can be extended. And this process can be repeated again and again. That is, you can extend it for 5-5 years.
If you extend the scheme after the maturity of 15 years, then after 15 years, you will continue to get 7.1 percent annual interest (PPF Interest Rate) on the closing balance. On the other hand, if you extend it with investment, then interest on interest will be added in the scheme in the same way as before maturity.
When you extend the scheme for 5 years without investment, you can withdraw any amount once in a year. But when you extend the account with investment, it is important to note here that you can withdraw only up to 60 percent of the amount once in a year.
Let us now understand the extension facility in PPF with an example.
PPF: How much fund can be created on maturity of 15 years
If you make maximum deposit in every financial year till maturity in PPF i.e. for 15 years, then a total fund of Rs 40,68,209 can be raised as per the current interest rate.
Maximum deposit in a financial year: Rs 1.50 lakh
Interest rate: 7.1 per cent per annum
Total deposit in 15 years: Rs 22,50,000
Total fund after 15 years: Rs 40,68,209
PPF: How will be the monthly income
Here you ran the scheme for 15 years and created a fund of Rs 40,68,209. Now if you extend it for 5 years without investing anything, you will get 7.1 percent interest on the closing balance. At the same time, you can withdraw any amount at once in a year.
Now let’s assume that you plan to withdraw only the interest amount once in a year. Here you will get 7.1 percent annual interest on your closing balance. This will be Rs 2,88,843 in a year. You can withdraw this entire interest amount once in a year. If you divide it into 12 months, it will be Rs 24,000 per month. There will be no tax on this withdrawal. One thing is clear here that through PPF, tax free income of up to Rs 24,000 can be easily taken every month.
PPF: If you invest for 20 years
Maximum deposit in a financial year: Rs 1.50 lakh
Interest rate: 7.1 per cent per annum
Total deposit in 15 years: Rs 22,50,000
Total deposit in 20 years: Rs 30,00,000 (Rs 1.50 lakh X 5 + Rs 22,50,000)
Total fund after 20 years: Rs 66,58,288
How will be the monthly income after 20 years
It is clear from the above calculation that by extending the PPF account for 5 years, you can create a fund of about Rs 66.50 lakh. Now if you extend it for 5 years without investing anything, you will get 7.1 percent interest on the closing balance. At the same time, you can withdraw any amount at once in a year.
Now let’s assume that you plan to withdraw only the interest amount once in a year. Here you will get 7.1 percent annual interest on your closing balance. This will be Rs 4,72,738 in a year. You can withdraw this entire interest amount once in a year. If you divide it into 12 months, it will be Rs 39,395 per month. At the same time, there will be no tax on this withdrawal.
How to open PPF account?
Any Indian citizen can open this account in Post Office Small Savings in his or his child’s name. Both offline and online processes are available for this. These are the documents required for this.
KYC documents verifying a person’s identity, such as Aadhaar card, voter ID card, driving license, etc.
PAN card
Address Proof
Form for declaration of nominee
Passport size photo
