PPF or the Public Provident Fund has helped the contributor to beat the taxman ever since the scheme was launched in 1968. Any Indian can open a PPF account. In fact, a PPF account can be opened in the name of a minor too.
An individual can open only one PPF account in one’s name.
Though the PPF has lost a bit of sheen recently due to the surge of market-linked instruments, it still inspires trust in millions and millions of Indians.
If one doggedly continues to invest in a PPF account, he/she can make significant funds over time.
PPF calculator Rs 1.5 lakh
If a person invests the entire tax deductible amount of Rs 1.5 lakh every year in the PPF account and continues doing so for 35 years.
Let’s assume that the rate of interest payable stays unchanged at 7.1%.
The amount that one can create is almost Rs 2.27 crore (Rs 2,26,97,857).
The nominal investment that one makes in these 35 years is Rs 52.50 lakh. This amount earns a total interest of Rs 1.74 crore (Rs 1,74,47,857) taking the total corpus to nearly Rs 2.27 crore.
The above calculation is based on the fact that PPF investments have an initial period of 15 years but one can extend it indefinitely for blocks of five years. One can easily start contributing to the PPF at the age of 25 and continue for 35 years when he/she retires from service at 60.
EEE status
In fact, the actual returns will be more than what the above numbers indicate. The reason; PPF is one of the few schemes that enjoy a EEE (exempt-exempt-exempt) status according to the Income Tax Act 1961. It basically means the investment, the interest accrued and the maturity amount are all exempt from income tax liability.
So, every year you would be getting additional cash in hand for investing in a PPF account.
PPF + EPF
If one combines this amount with the Employees Provident Fund account proceeds at the end of one’s working life, it turns out to be a cool corpus of a few crores.
What’s significant is that both PPF and EPF are the two most secure abd tax-free investments in India today.
PPF The Public Provident Fund has been trusted by millions of Indians, not without a sound reason. Though market-linked instruments are posing serious competition, the PPF enjoys a huge contributor base. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
