New Delhi: PPF investments are exempted from Income Tax under Section 80C. Taxpayers can start their PPF account with a minimum investment of Rs 500, which is also the minimum annual investment that one should make to keep the account active through the year. PPF has a maturity period of 15 years and can be extended, thereafter in 5-year intervals for an unlimited period.
PPF Calculator
Invest Rs 1.50 lakh per annum for 15 years in PPF. You will earn 7,1 per cent interest rate on these investments.
After 15 years, your principal will stand at Rs 22,50,000.
Interest earned will be worth Rs 18,18,209.
The overall maturity value will be Rs 40.68 lakh.
5-year extension
Now, take this amount and extend the PPF by another 5 years.
If you keep investing Rs 1.50 lakh per year for this duration, your principal will grow to Rs 48,18,209, while your interest will stand at Rs 17,10,464.195, taking the total to Rs 65,28,673.195.
Second extension
Another 5-year extension will take the principal to Rs 72,78,673.195, while the interest will be Rs 25,83,928.
This will take your total corpus to Rs 98,62,602.17, very close to Rs 1 crore.
Here’s how to earn Rs 1 crore
Another 5-year extension will take the principal to Rs 1,01,62,602.17.
The interest will be Rs 14,43,089.50.
The total corpus will be worth Rs 1,13,05,691.68.
It is important to note that PPF extension is useful when an investor opens their account at a young age. If one starts investing in PPF at age 25, the account will mature at the age of 40. After this, if you extend your PPF account in 5-year tranches 3 times, you will be 55 years old, still short of the broader retirement age of 58 years.
The PPF interest rate was fixed at 7. 1 per cent by the finance ministry at the end of the June quarter. The finance ministry reviews the interest rates for government schemes on a quarterly basis. The interest on PPF is calculated based on the amount in your account on the 5th and last date of every month. Ensure that the account remains unchanged on both dates to earn equal returns.
PPF Calculator: If you plan to save tax using PPF, here’s another way to create a corpus of Rs 1 crore. Know how much you should invest. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
