If you are looking for a government scheme that gives tax benefits and guaranteed returns, the Public Provident Fund (PPF) is one of the best options. This scheme is safe and works as a strong long-term retirement plan for investors. It is a government-backed and risk-free savings scheme that offers EEE (Exempt-Exempt-Exempt) tax benefits — which means the investment amount, interest earned, and maturity amount are all tax-free. Let’s see how you can earn around ₹2.88 lakh every year from PPF.
The Secret of PPF
Any Indian citizen can open a PPF account in their own name at a post office or any bank. You can also open an account for a minor. Remember, only one PPF account can be opened per person. There is no joint account option.
If both husband and wife are working, they can open separate PPF accounts. This gives the family double tax benefits and higher investment opportunities.
Interest Rate and Investment Limit
At present, the government offers an annual interest rate of 7.1% on PPF. The interest is compounded annually, meaning you earn interest on both your principal and the previous year’s interest — helping your money grow faster.
The tenure of the PPF account is 15 years, and it can be extended in blocks of 5 years. You can invest a minimum of ₹500 and a maximum of ₹1.5 lakh per year.
If both husband and wife open separate accounts, the family can jointly invest up to ₹3 lakh per year.
How Much Interest and Return Will You Get?
Let’s say you invest the maximum amount of ₹1.5 lakh every year in PPF for 15 years. After 15 years, your total maturity amount will be around ₹40,68,209. Out of this, about ₹18,18,209 will be the interest earned — meaning you’ll get around 45% more than your investment, and all of it is completely tax-free.
In simple words, if you deposit ₹1.5 lakh every year in your Public Provident Fund (PPF) account for 15 years, you’ll get around ₹40.68 lakh on maturity. Now, if you keep this money in your account and don’t withdraw it, at the current interest rate of 7.1%, you’ll earn around ₹2.88 lakh per year as interest. That means you’ll have a guaranteed yearly income without making any new investment.
How to Earn Lakhs in Interest Without New Investment?
The best part of PPF is the Extension Without Contribution feature. After completing 15 years, you can extend your PPF account without depositing any new money.
During this time, the balance in your account will keep earning interest every year.
For example, if you have around ₹40 lakh after 15 years and extend the account, you’ll earn about ₹2.88 lakh every year in interest — that too without investing a single rupee more.
Why Is PPF So Special?
- Tax-free returns – No tax is charged on interest or maturity amount.
- Guaranteed returns – Your money is fully safe with a fixed government interest rate.
- Loan and withdrawal option – You can take a loan or withdraw partially if needed.
- Perfect for retirement – It provides steady, secure income for long-term planning.
In short, PPF is not just a savings scheme but a source of lifelong income. You can save tax, build wealth, and if you use the Extension Without Contribution method, you can keep earning lakhs in interest every year — all completely tax-free.