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Public Provident Fund, or Public Provident Fund or PPF – every employed person must have heard this name at some time or the other and many people must have also opened an account under this scheme. PPF is the most popular scheme among the small savings schemes run by the Central Government to give an opportunity to save for a secure future and earn tax-free interest and if invested in a disciplined manner, it can definitely make you a millionaire on retirement. NDTV readers / users have already been told that with the help of a PPF account, ₹ 2.27 crores can be raised in 35 years and a PPF account makes any investor a millionaire in 25 years, but today we will tell you that with a PPF account you can also get a regular pension of ₹ 60989 per month after retirement. So keep reading and know how…
There is no tax on EEE category scheme PPF.
First of all, it would be good to know important and beneficial things about PPF, so first of all remember that the amount deposited every year in the PPF account is exempt from income tax, the interest you get every year in this account is also not taxable, and the entire amount received at the time of maturity is also not subject to income tax.
Where and how to open a PPF account…?
Any Indian can open an account in the highly popular savings scheme PPF by visiting any post office or any bank branch, in which the account holder has to deposit a minimum of ₹500 and a maximum of ₹1,50,000 during each financial year (1 April to 31 March).
How a PPF account will make you a millionaire in 25 years…
Now let us tell you how to arrange for a pension of about ₹ 61000 per month on retirement. If you are 35 years old, and you open a PPF account at the beginning of this financial year and deposit ₹ 1,50,000, then on March 31 next year, ₹ 10,650 will be added to your PPF account as interest, because at present the Narendra Modi government at the Center is giving interest at the rate of 7.1 percent on the amount invested in PPF. Due to this interest, on the very first day of the next financial year i.e. on April 1, 2025, a balance of ₹ 1,60,650 will appear in your PPF account, which will become ₹ 3,10,650 if you deposit ₹ 1,50,000 before April 5 in the new financial year. After this, on 31 March 2026, the interest at the same rate will be ₹ 22,056 and the remaining amount will be ₹ 3,32,706. Now you, the PPF investor, have to deposit ₹ 1,50,000 in your PPF account every year between 1 and 5 April. In this way, with the help of disciplined investment, at the time of maturity i.e. after 15 years, you will see ₹ 40,68,209 in your PPF account, out of which ₹ 18,18,209 will be the interest amount and your original investment will be ₹ 22,50,000.
If you have opened a PPF account at the age of 35, then at the time of maturity, you will be 50 years old, but there are still 10 years left for retirement. According to the rules related to PPF account, you can extend your PPF account in blocks of 5 years by applying before maturity. The benefit of five-year extension can be availed unlimited times. Now at the age of 50, extend your account, and maintain an annual routine of investment. Now your PPF account will be on the verge of maturity, when you will be 55 years old. At that time, ₹ 66,58,288 will be visible as the amount deposited in the PPF account, in which ₹ 36,58,288 will be in the form of interest, and your investment will be ₹ 30,00,000.
Now once again take the PPF account forward, and keep investing every year as before, because your journey to become a crorepati and get a monthly pension of ₹61000 is about to begin now. This time after five years, when your PPF account matures, you will be 60 years old, and the total amount in your account will have crossed the figure of one crore. At that time, a total of ₹1,03,08,014 will be deposited in your PPF account, in which your investment will be ₹37,50,000 and the government has so far deposited ₹65,58,015 in your account as interest.
How will the monthly pension of ₹60989 be arranged from PPF account…?
Now read another rule related to the extension of PPF account. Whenever you extend the PPF account, you have two options. One- Investment will continue after the extension. Second- Investment will not be made after the extension. Till now you have extended your account twice, but did not stop investing, so the amount kept growing very fast. But now it will not be easy and convenient to invest after retirement, so now the time has come to get pension without making new investments.
Without making any fresh investment in PPF account you will get interest of ₹7,31,869…
So now you will not make any new investment this year, but will continue the account. So this time the deposit amount will also remain ₹ 1,03,08,014 and at the end of the year you will get interest of ₹ 7,31,869. Here we are assuming that the interest rate will remain the same as it is today.
Now know another rule about withdrawing money from PPF account. When you choose to carry forward the PPF account without investing, you get the right to withdraw money once in a financial year. All you have to do is withdraw only the interest amount every year, that is, now you withdraw only this year's interest amount of ₹ 7,31,869 from your PPF account, and deposit it in your savings account. This is your pension amount, if you divide it into 12 months, you can spend ₹ 60989 every month.
Another interesting fact that is worth remembering is that despite this withdrawal, your deposit in the PPF account will remain ₹ 1,03,08,014 and next year you will be able to withdraw the interest earned on it, ₹ 7,31,869. The most beneficial information in this withdrawal is that the interest amount withdrawn every year will be completely tax free, that is, you will never have to pay income tax on this amount.
It is important to remember some important things about PPF account…
The interest rate on PPF account is decided by the Central Government every quarter, so if the interest rate increases or decreases, the amount received on retirement may also increase or decrease.
The most beneficial for the investor in PPF would be to invest in the first five days of April, so that maximum interest can be obtained.
Remember, the maturity amount mentioned in this news is obtained after running the PPF account continuously for 25 years, hence if the initial age of the investor is more than 35 years, or he does not extend the PPF account at least twice after the first regular maturity of 15 years, then the maturity amount may be less.