Public Provident Fund or PPF is a saving scheme that is risk-free and supervised by the Government of India. As per the experts, PPF is an investment tool that helps investors with an array of benefits. Experts say that if invested properly, one can be a crorepati at the time of recovery. You just need to extend one’s PPF account for 15 years maturity period. Additionally, you will be getting exempted income tax on the investment, PPF interest earned, and the PPF withdrawal amount.
A Mumbai-based investment and tax expert Balwant Jain speaks on the income tax benefit for the PPF account. He said that the PPF account comes under the EEE category where if a person invests up to ₹ 1.5 lakh per annum then he should not need to pay taxes. Moreover, the Public Provident Fund maturity amount and PPF interest rate are also tax-free. He additionally said that one can start investing in a PPF account at the age of 30 years and keep on investing for the next 30 years; they simply need to fill and submit an application form of their PPF account to extend investment.
Manikaran Singhal (Founder, goodmoneying.com) said in regards to PPF account extension that “a person can extend his/her PPF account for 5 years by submitting an application form at the bank or post office where one’s PPF account exists as we said above.”
Lets’ say that an investor opens Public Provident Fund at the age of 30 years and invest ₹9,000 per month which is equal to ₹1,08,000 per annum. The PPF account holder extends his or her PPF on three occasions, i.e. in the 15th year, 20th year, and 25th year. With this process, the account holder can continue saving in PPF for 30 years.
Suppose the existing PPF interest rate is 7.1% for the entire period of investment, the State of India PPF calculator shows that one will get ₹1,07,86,639.32. Here is how!
From the PPF maturity amount (₹1,07,86,639.32), one will only invest ₹32,40,000 in the 30 years of tenure and get ₹75,46,639.32 PPF interest.