Regular income of PPF: How to get tax-free income of Rs 1.8 lakh per year from public provident fund?

Public Provident Fund (PPF) is a long-term, government-backed savings program in India that aims to encourage consistent savings in gold years. Interest rates are for at least 15 years, determined by the Indian government every quarter and are currently 7.1% per year. On this account, let's find out how to get tax-free income of Rs 1.8 lakh/year from PPF.

Can also read: How much money will you make in 18 years by investing post office public provident fund of Rs 5,000, Rs 7,000 and Rs 10,000?

What is public provident fund?

The PPF is a long-term, government-backed savings program in India that aims to encourage stable savings in the golden years. The fixed term of office of the PPF program is 15 years and can be chosen to expand in a 5-year range.

Benefits of PPF

• Guaranteed return
• Tax benefits under Section 80C of the Income Tax Act
• Open to all individuals, including those employed or self-employed
• Parents or guardians can open PPF accounts for minors

What are the minimum and maximum deposit amounts in PPF?

The minimum deposit required for a public provident fund (PPF) account for a year is Rs 500. On the other hand, the maximum investment limit for a year is Rs 1.5 lakh.

Tax benefits in PPF

Invest in a Public Provident Fund (PPF) account to provide attractive tax benefits. Under Article 80C, donations up to Rs 1.5 lakh per year are eligible for tax deductions. Additionally, the interest you earned on your investments and corpus is completely tax-free.

Can you exit PPF before you mature?

While the expiration period of a Public Provident Fund (PPF) account is 15 years, subscribers or account holders can make partial withdrawals before maturity. Here's what you need to know:
You can make a withdrawal in each financial year 5 years from the date of account opening.
Please note that the 5-year lock-up period includes the account opening year.
For example, if you opened a PPF account on 2024-25, you can withdraw your money for the first time in 2030-31 or later.

How much can you exit from PPF?

Keep specific restrictions in mind when withdrawing from your Public Provident Fund (PPF) account:
You can withdraw 50% of your balance at the end of the previous year or the previous year, whichever is lower.
For example, if you are withdrawing money in the 2024-25 fiscal year, you can withdraw 50% of your balance as of March 31, 2023 or March 31, 2024, whichever is lower.

What happens to your PPF account in 15 years?

After completing the initial 15-year period, you can have the flexibility to manage your Public Provident Fund (PPF) account as follows:
You can choose to continue your account with or without further deposit.
This allows you to extend the benefits of your PPF account to your initial expiration date.

How to get Rs 1.8 lakh/year income from PPF?

To generate more than Rs 18 lakh per year from PPF, it is necessary to start with an investment of Rs 15 lakh per year and then continue until maturity of 15 years. Later, you can expand your account to an unlimited 5-year block for maximum returns.

What will the PPF corpus be in 15 years?

The investment amount in 15 years is Rs 22,50,000, with an estimated interest of Rs 18,18,209 and an estimated due amount of Rs 40,68,209. Investors can extend the amount of 5 years and continue to invest Rs 15,000 in the same way as before.

What will the PPF corpus be in 20 years?

In 20 years, the total investment will be Rs 30,000,000, with an estimated interest of Rs 36,58,288 and an estimated corpus of Rs 66,58,288. At this stage, investors can extend the investment of Rs 1.5 lakh per year.

What is the PPF corpus 25 years later?

In 25 years, the total investment will be Rs 37,50,000, with an estimated interest of Rs 65,58,015 and an estimated corpus of Rs 1,03,08,015.

What is the PPF corpus 30 years later?

In 30 years, the total investment will be Rs 45,000,000, with an estimated interest amount of Rs 1,09,50,911 and an estimated corpus of Rs 1,54,50,911.

What is the PPF corpus 35 years later?

In 35 years, the total investment will be Rs 52,50,000, with an estimated interest amount of Rs 1,74,47,857 and an estimated due amount of Rs 2,26,97,857.

Disclaimer: Not financial advice; your own venture capital