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PPF Interest Rate: Public Provident Fund (PPF) is a long-term investment option. Its main attraction is related to tax savings. Launched in 1968 by the National Savings Institute under the Ministry of Finance, PPF aims to fund retirement through small savings in addition to saving from income tax.
If you invest in PPF regularly for 25 years, you can save Rs. 1 crore and a retirement fund of Rs. 1 crore can be created. You can invest Rs. 500 in PPF. You can invest up to Rs. 1.5 lakh. PPF is an important investment medium for salaried class and other individuals.
PPF account can be continued for 25 years
The maturity period of a PPF account is 15 years. But you can extend it in blocks of 5 years each. If you keep depositing some money in your PPF account every year for 15 years, then after 15 years you will have a good fund. After 15 years, you can close your PPF account or continue it for another 5 years after 10 years.
Rate of interest
The interest rate on PPF is fixed by the government and is reviewed every three months. It usually ranges between 7 to 8% per annum and interest is paid annually only. Currently, the interest rate on PPF is fixed at 7.1 percent.
Benefits of investing in PPF
PPF gives you three types of concessions. Here you do not have to pay any tax under Section 80C of Income Tax on the money invested, the interest received on it and the income on maturity. Apart from this, being a government-backed scheme, PPF is considered a safe investment. There is no risk of any kind.
How to raise a fund of ₹1 crore?
Interest is paid on PPF at the end of every year. If you want to get maximum benefit then you should invest Rs. 1.50 lakh or Rs. 12500. Then you will get interest for the whole year. The total amount deposited in your account at the end of the year will be Rs. 160650.
Rs in 15 years Rs 18.18 lakh interest
If you deposit this Rs. 1,60,650 in the second year and an additional Rs. 1.50 lakh, the total amount will be Rs. 3,10,650. At the end of the year, you will get Rs. 22,056 as interest. If you keep depositing Rs. 1.50 lakh in your PPF account every year on April 1, then at the end of 15 years, the total amount will be Rs. 22.50 lakh and a total fund of Rs. 40.68 lakh will be created, out of which Rs. 18.18 lakh will be the interest.
At the end of 25 years, you will get Rs. 1.03 crore
If you do not close the PPF account after completion of 15 years and extend it for another five years, then your investment of Rs. 30 lakh will grow to Rs. 66.58 lakh. It will earn Rs. 36.58 lakh as interest. If you extend it again for five years (total 25 years), then your investment will be Rs. 37.50 lakh and interest will be Rs. 65.58 lakh. In this way, you will get a total of Rs. 1.03 crore.