PPF: The Public Provident Fund is a savings scheme of the Government of India that offers both secure returns and tax benefits. This scheme currently offers an interest rate of 7.1%, which has remained stable since April 2020. Anyone can open a PPF account by depositing as little as Rs 500 at a bank or post office. This scheme is considered an excellent way to save substantially over the long term and save taxes. Let us now explain how you can use PPF for regular income and earn Rs 60,000 tax-free each month.
What is PPF?
PPF is a long-term savings scheme specifically designed for post-retirement financial security. Anyone, whether employed or self-employed, can invest in it. Parents can also open a PPF account in their children’s names. The interest earned and the entire investment amount are tax-free. The term of a PPF account is 15 years. After completion of 15 years, it can be extended for five-year periods. Furthermore, the minimum investment is Rs 500 per year and the maximum investment is Rs 1.5 lakh per year.
What are the benefits of PPF?
Investments up to Rs 1.5 lakh in PPF are tax-exempt under Section 80C of the Income Tax Act. Furthermore, interest and maturity proceeds are tax-free. Partial withdrawals from a PPF account are permitted once per financial year after the completion of five years, including the year of account opening. The maximum withdrawal limit is up to 50% of the account balance.
This allows withdrawals up to the end of the fourth year or the previous year, whichever is less. After completing 15 years, investors can choose to extend the account by maintaining a deposit or continue earning interest without adding any new funds.
How to earn Rs 60,000 per month?
In fact, if an individual invests Rs 1.5 lakh each financial year and continues this process for 15 consecutive years, they can earn a substantial Rs 60,000 per month from PPF. According to experts, investing between April 1st and 5th each year is considered optimal for maximizing interest.