Public Provident Fund Calculator: The Public Provident Fund, or PPF, was launched by the Indian government years ago to benefit small savers, who do not have a risk taking appetite. It is one of the most popular government-backed saving schemes in India. The PPF is also one of the very few schemes that provides an option to the public to save taxes with its Exempt-Exempt-Exempt (EEE) feature, meaning that it is totally a tax free savings option. Introduced in 1968 by the Ministry of Finance’s National Savings Institute, PPF has become a powerful tool for Indians wherein they can enjoy tax benefits.
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PPF Interest Rate and Maturity
Currently, PPF offers an interest rate of 7.1 per cent annually, and interest is calculated on a monthly basis. Investors can invest their money in their PPF account for as many as 15 years in a row, as per the guideline. However, if one does not need the money at the end of 15 years, he or she can can extend the tenure of the PPF account for as many years as needed. This can be done in blocks of five years by submitting a PPF Account Extension Form. Investors can invest as low as Rs 500 per year, and as high as Rs 1.5 lakh per year, in their PPF accounts.
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With good interest returns, high popularity, low risk and tax free nature, the PPF can also help investors accumulate as much as Rs 1 crore if they invest properly. For this, investors have to follow the method mentioned below.
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If you invest Rs 417 a day in your PPF account, the monthly investment value comes to around Rs 12,500. This means that per year, you are investing a little more than Rs 1,50,00 in your Public Provident Fund account, which is the maximum limit. In 15 years, the total amount accumulated will be Rs 40.58 lakh, and thereafter you have to extend the tenure twice in block of five years each.
If you keep doing this from the age of 25 up to the age of 50, that is for 25 years, the amount that you will get during maturity will be as much as Rs 1.03 crore lakh. This amount will be totally tax free and the total interest earned will be nearly 66 lakh. The total amount you would have deposited in 25 years will turn out to be around Rs 37 lakh.
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On this note, it must also be mentioned that the best way to get higher returns on your investment is to deposit the money between the 1st to 5th of every month as the interest is calculated monthly.
However, if you cannot invest such a huge amount, there is no compulsion that you have to. Public Provident Fund, or PPF, is flexible in nature in terms of investment as individuals can invest as low as Rs 500 per year into their accounts.
