Public Provident Fund: Public Provident Fund (PPF) is a long term saving plan operated by the government. This scheme was started by the Government of India in 1968.
Its purpose is to provide guaranteed returns to the investor with tax benefits under Section 80C of the Income Tax Act, 1961. Any person can open a PPF account in a post office or bank with a minimum investment of Rs 500. If you want, you can also open a PPF account in the name of your wife. Let us understand how any investor can get a tax free income of Rs 1,06,828 every month from PPF?
What is PPF?
PPF is a retirement focused scheme that offers guaranteed returns and tax benefits under Section 80C of the Income Tax Act, 1961. Anyone can invest in this small saving scheme. Salaried class and business people can invest in it. Under this, you can invest a minimum of Rs 500 and a maximum of Rs 1.5 lakh in a financial year.
What is the maturity period of PPF?
The initial lock-in period of PPF is 15 years. After 15 years, account holders can extend their account for unlimited blocks of 5 years each. Any PPF account holder can withdraw the account once during a financial year after five years. In case of need of money, you can withdraw 50 percent of the remaining amount on credit at the end of the fourth year or at the end of the previous year, whichever is less. That is, in 2023-24, up to 50% of the remaining amount can be withdrawn till 31.03.2023 or 31.03.2024, whichever is less.
How to get Rs 1.06 lakh every month?
To get Rs 1,06,828 every month from PPF, one has to start investing Rs 1.50 lakh in every financial year and continue it till the maturity period of 15 years. To get maximum benefit of interest, investment should be made between April 1 and April 5 in every financial year. This investment should be of Rs 1.5 lakh in lump sum.
Maturity after 15 years
If you invest Rs 1.5 lakh every year, then in 15 years you invest a total of Rs 22.50 lakh. During this time, you will get interest of about Rs 18.18 lakh on the money. According to this, the maturity amount will be Rs 40,68,209. Investors can take a five-year extension on this and can continue investing Rs 1.50 lakh every year as before.
Maturity after 20 and 25 years
In 20 years, the investment amount will increase to Rs 30,00,000 and interest of Rs 36,58,288 will be received on it. In this way, the maturity amount will be around Rs 66,58,288. Here the investor can take another extension of five years and continue investing Rs 1.5 lakh annually. Similarly, in 25 years, the interest on the investment amount of Rs 37.50 lakh is Rs 65,58,015. The total maturity amount is Rs 1,03,08,015.
What will be the maturity after 29 years?
If you keep investing Rs 1.5 lakh every year in PPF for 29 years, then during this time you will deposit a total of Rs 43.50 lakh. During this time you will get interest of about Rs 99.26 lakh. That is, your maturity amount will be Rs 1 crore 42 lakh 76 thousand 621. Similarly, in 32 years the total investment will increase to Rs 48,00,000 and the interest will be around Rs 1,32,55,534. After 32 years, you will get Rs 1 crore 80 lakh 55 thousand 534 on maturity. You can stop your investment here.
Now you can withdraw the interest earned on this money every month. If you have extended this scheme for more than 15 years, then you can withdraw the interest only once every year. If you deposit the Rs 1 crore 80 lakh received on maturity in the bank and the bank gives you 7.1% interest annually, then you will get an interest of about Rs 15 lakh 4 thousand in a year. If you divide this interest into 12 months, then you will get about Rs 1 lakh 6 thousand every month.
(Disclaimer: All these calculations are based on estimates only. This is not any definite information on the basis of which you should take an investment decision. Consult an expert or your financial advisor before making any kind of investment.)
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