Small savings schemes favor the Public Provident Fund (PPF) because it delivers assured returns coupled with tax benefits. The ’15-year PPF’ provides an interest rate of 7.1% per annum at present and applies yearly compounding. The PPF investment program lets investors start with a 15-year term but allows them to keep the account active with a five-year extension. Among the provisions of Section 80C within the Income Tax Act contributors can claim tax deductions up to Rs 1.5 lakh annually while maintaining tax-free interest earnings and final payout benefits. The strategic investment of PPF produces an annual payout of Rs 6.73 lakh or Rs 56,060 per month throughout 24 years.
PPF Lock-In Period And Extensions
PPF investors must keep their money locked in for 15 years and then extend this period up to 5 years at a time without limits on further extensions. After maintaining contributions during their extended period of participation investors obtain access to regular annual withdraws based on certain specifications. The annual contribution process must occur throughout the 15-year term and every extension period for investors to maximize their return.
Reaching Your PPF Goal
The estimated total amount at maturity following 15 years will reach ₹40.68 lakh consisting of Rs22.5 lakh principal and Rs 18.18 lakh interest payments. Extending the investment term by five years alongside continuing Rs 1.5 lakh annual deposits will allow the account to grow to approximately Rs 66.58 lakh which includes Rs 30 lakh principal and Rs 36.58 lakh interest.
The PPF becomes extended by five more years, to sum up 25 total years which calculates to Rs 1.03 crore in value including Rs 37.5 lakh principal and Rs 65.38 lakh interest. When the PPF term reaches day 240 the accumulated value amounts to Rs 94.75 lakh made up of Rs 36 lakh principal and ₹58.75 lakh interest.
Generating Regular Income From PPF
The investor can start withdrawing interest annually at the 24-year point under specific conditions. The yearly sum available from this investment exceeds Rs 6.73 lakhs or Rs 56,060 per month. A strategic approach to PPF extension creation enables investors to establish a dependable and tax-advantageous flow of regular income.
(Disclaimer: This article is for informational purposes only and not an investment advice. Prior to making an investment or taking a loan, conduct thorough research and consult with your financial advisor.)
