PPF investors can avail tax deduction benefits of up to Rs 1.5 lakh. PPF investment falls under the EEE (Exempt-Exempt-Exempt) category, which means you can enjoy tax benefits on deposits, interest earned and maturity amount.
The Public Provident Fund (PPF) for a very long time has been a popular choice for investors who seek long-term savings. PPF brings with it safety and stability, which means investors can be assured of low-risk investment with guaranteed returns.
PPF with a maturity period of 15 years helps investment grow steadily over time, using the compounding benefit towards a significant corpus on maturity.
Under Section 80C of the Income Tax Act (Old Tax Regime), PPF investors can avail tax deduction benefits of up to Rs 1.5 lakh. PPF investment falls under the EEE (Exempt-Exempt-Exempt) category, which means you can enjoy tax benefits on deposits, interest earned and maturity amount. In this article, we will explore how much corpus one can build by investing Rs 12,500 per month or Rs 1.5 lakh per annum for the whole PPF tenure of 15 years.
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What Rs 12,500 monthly deposits can yield in 15 years with tax benefits
Monthly PPF Investment – Rs 12,500 or Rs 1.5 lakh annually
Current PPF Rate of Interest – 7.1%
Total Contribution in PPF over 15 Years – Rs 22.5 lakh
Total Interest Earned – Rs 18,18,209
Overall Maturity Value – Rs 40,68,209
An investment of Rs 1.5 lakh per annum or Rs 12,500 per month under PPF for the full 15-year term can build a corpus of Rs 40.68 lakh in 15 years, showing significant PPF’s financial benefits and long-term savings potential.
Now, if you do not withdraw the amount on maturity and continue with fresh investments for another 10 years, in two blocks of 5 years each, you will have a corpus of more than Rs 1 crore.
If we break it down, your total deposits come to Rs 37.5 lakh over a period of 25 years. On this, you earn an interest of Rs 65.58 lakh, taking the total corpus to Rs 1.03 crore. At the end of investment period, your total corpus would be Rs 1.03 crore.
To continue PPF account after 15 years, PPF depositors need to notify and submit Form 4 to the concerned post office or bank within 1 year of the account maturity.
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How is interest calculated under PPF?
For any given month, investments made on or before the 5th of the month will be considered for interest calculation for that month. Interest is calculated on the lower of the balance held on the 5th of a month to the end of the month.
What is the minimum and maximum amount one can invest in PPF?
Under PPF, one can deposit an amount as low as Rs 500 and invest up to Rs 1,50,000 in a financial year. Investment can be done in monthly instalments or lump sum at any point during a financial year.
Other benefits of PPF investments
You can avail a loan on PPF account after three years of continuous investment. Partial withdrawal is also allowed from PPF deposits from the seventh financial year onwards. PPF account matures after 15 complete financial years from the date of its opening. After that, it is up to the account holder whether to extend the account or not. If the PPF subscriber wants he or she can has an option to extend the matured amount investment in blocks of five years.
