Investing In PPF To Save Taxes? Here's How Much You Can Earn In 15 Years
Investing in a Public Provident Fund (PPF) not only helps you save on taxes, but also ensures risk-free, long-term wealth accumulation.
The Public Provident Fund (PPF) has been a trusted investment avenue in India since its introduction in 1968. It provides a secure way to build a retirement corpus while benefiting from tax savings. If you are looking for a risk-free investment option with guaranteed returns, opening a PPF account could be an excellent choice.
What Is A PPF Account?
A Public Provident Fund (PPF) account is a long-term investment instrument that offers attractive interest rates along with tax benefits. The returns and interest earned on a PPF account are completely tax-free. Investors can claim the amount deposited under Section 80C deductions, making it a popular tax-saving option.
One can start investing in PPF with a minimum amount of Rs 500 per year, while the maximum annual contribution allowed is Rs 1.5 lakh.
Features Of PPF Account
Interest rate: 7.1% per annum (subject to periodic revision)
Minimum investment: Rs 500 per year
Maximum investment: Rs 1.5 lakh per annum
Tenure: 15 years (can be extended in blocks of 5 years)
Risk profile: Safe and government-backed
Tax benefit: Contributions up to Rs 1.5 lakh qualify for deductions under Section 80C
Who Can Open A PPF Account?
Resident Indian adults: Any Indian resident can open a PPF account in their name.
Guardian for minors or dependent individuals: A parent or legal guardian can open a PPF account on behalf of a minor or a dependent.
One account per individual: A person can hold only one PPF account, which can be opened at a bank or post office.
What Happens After Maturity?
Once the 15-year tenure is complete, the PPF account holder has multiple options:
Withdraw the maturity amount: By submitting an account closure request and passbook at the bank or post office.
Continue without additional deposits: The funds can remain in the account, earning interest at the prevailing PPF rate. The depositor can withdraw funds as needed, with a limit of one withdrawal per financial year.
Extend the account in blocks of five years: The account can be extended indefinitely in five-year increments by submitting an extension request within a year of maturity.
How Much Can You Earn In 15 Years With 7.1% Interest?
Your returns on a PPF investment depend on the amount you contribute. Here’s a breakdown of potential earnings:
Scenario 1: Rs 2,000 per month
Annual investment: Rs 24,000
Total investment (15 years): Rs 3,60,000
Interest earned: Rs 2,90,913
Maturity amount: Rs 6,50,913
Scenario 2: Rs 3,000 per month
Annual investment: Rs 36,000
Total investment (15 years): Rs 5,40,000
Interest earned: Rs 4,36,370
Maturity amount: Rs 9,76,370
Scenario 3: Rs 4,000 per month
Annual investment: Rs 48,000
Total investment (15 years): Rs 7,20,000
Interest earned: Rs 5,81,827
Maturity amount: Rs 13,01,827
Scenario 4: Rs 5,000 per month
Annual investment: Rs 60,000
Total investment (15 years): Rs 9,00,000
Interest earned: Rs 7,27,284
Maturity amount: Rs 16,27,284
PPF Withdrawal Rules
PPF accounts come with withdrawal restrictions to ensure long-term savings discipline. Here’s what you need to know:
Withdrawals can be made only after five years from the account opening date (excluding the year of opening).
The maximum amount that can be withdrawn in a financial year is 50% of the balance at the end of either the fourth preceding year or the previous year, whichever is lower.
PPF remains one of the most reliable investment options for those seeking risk-free, tax-efficient savings. With a guaranteed return and the ability to extend beyond 15 years, it is a smart choice for long-term wealth accumulation.
