New Delhi: Public Provident Fund, i.e., PPF, is a long-term, tax-saving investment scheme offered by the Government of India. The assurance of the government makes it an even more interesting investment avenue. Any individual, having a capital ranging from Rs 500 to Rs 1.5 lakh per year, could invest in PPF. The returns received are tax-free up to Rs 1.5 lakh under Section 80C of the Income Tax Act 1961, thereby, gaining significant returns for the investors. Loan facility is available from the 3rd year to the 6th financial year. A provision of monthly income of up to Rs 61,000 is also there in the scheme.
Currently, the PPF fund is attracting the interest rate of 7.1 percent per annum. The interest rate is decided by the government from time to time. It gives the benefit of compounding, i.e., interest earned on interest.
PPF 15+5+5 invest formula
15+5+5 Invest formula means 15 years + 5 years + 5 years, totaling 25 years. If one invests Rs 1.5 lakh for 25 years in the PPF account at the current interest rate of 7.1 percent, then the fund corpus would be around Rs 1.03 crore. The lock-in period of a PPF account is 15 years. But two extensions of 5 years each could be taken. That means the investor is allowed to invest for 25 years. In these extended 10 years, the investor could leave the money without investing. If the investment is continued, then more funds will be available after 25 years.
PPF Calculator
If an investor deposits Rs 1.5 lakh every year in his PPF account for 25 years, then after 25 years, a fund of more than Rs 1 crore 3 lakh will be accumulated, out of which Rs 37.5 lakh will be the principal amount, and the rest of the amount would be the interest from 25 years of investments. After the maturity period, the fund earns an annual interest of Rs 7,31,868 at the rate of 7.1 percent, which approximately equals to Rs 61,000 per month. Along with this, the investor’s principal amount of Rs 1 crore also remains safe.
The maturity period of a PPF account is 15 years. The entire amount cannot be withdrawn before the maturity period. If the investor wants, he can withdraw 50% of the amount after 7 years. An extension of 5 years each can be taken twice. If the investor wants, he can also stop investing during the extended period. This will not have any impact on the deposited funds.
PPF comes under the EEE category (Exempt-Exempt-Exempt). This means that total investment, interest earned on it, and withdrawal amount are not taxed.
The Public Provident Fund (PPF) in India offers a compelling long-term investment opportunity. A 15+5+5 year strategy, investing ₹1.5 lakh annually, can yield over ₹1 crore at a 7.1% interest rate. PPF enjoys EEE tax benefits (Exempt-Exempt-Exempt) and offers loan facilities and monthly income potential after maturity. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
