PPF- Public Provident Fund (PPF) is a government scheme. The objective of this scheme is to create a large fund through regular savings. This scheme is quite popular among the salaried class. It is seen as a retirement plan. The maturity period for this scheme is 15 years. Investment in this scheme gives guaranteed returns as well as saves tax. It can be a better option for people planning to invest for a long time without any risk.
Annual investment of Rs 1.5 lakh
This scheme is giving an interest of 7.1 percent per annum. A maximum of Rs 1,50,000 can be deposited in this scheme in a financial year. You can do this in 15 financial years, after which the scheme matures. The question is that if you are ready to deposit the maximum amount for 15 years, then how much interest and total fund will you get on maturity.
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- You will get big money on maturity
- Investment in one financial year: Rs 1.50 lakh (annually)
- Interest: 7.1% compounded annually
- Total investment in 15 years: Rs 22,50,000
- Fund on maturity after 15 years: Rs 40,68,209
- Interest benefit: Rs 18,18,209
This means you will get a total of Rs 40,68,209 on maturity. This includes a total investment of Rs 22,50,000 for 15 years and interest of Rs 18,18,209.
PPF scheme is completely tax free
The biggest benefit you get in this scheme is that this scheme comes under the “EEE” category i.e. you can get tax exemption on deposits up to Rs 1.50 lakh in a financial year. At the same time, there is no tax on the interest received from this. Whereas, the amount received on maturity is also out of the scope of tax. If you do not deposit at least Rs 500 in PPF in any financial year, then your account is closed. Your closed account can be restarted before maturity by paying the minimum subscription i.e. Rs 500 and a fee of Rs 50 for every default year.