PPF Scheme: In today’s uncertain times, every investor’s first choice is a place where their money is completely safe and guarantees stable returns. The Public Provident Fund (PPF) is one such government-backed investment option, securing your future financially with a robust interest rate of 7.1% and tax-free profits. If you’re looking to build a substantial corpus for your children’s higher education, marriage, or your own retirement, there’s no better and safer way than the PPF.
What is the PPF Scheme
The Public Provident Fund (PPF) is a long-term savings scheme fully supported by the Government of India. Its biggest advantage is its EEE (Exempt-Exempt-Exempt) status. This means that the money you invest, the interest earned, and the maturity amount are all completely tax-free. This scheme, which comes with a lock-in period of 15 years, harnesses the power of compound interest, turning your small savings into a substantial corpus over time.
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Profit on Savings of ₹3,000 and ₹5,000
If you’re confused about how much you should invest each month, the calculation is simple and straightforward. Suppose you deposit ₹3,000 each month into a PPF. Your total investment over 15 years will be ₹540,000. At an interest rate of 7.1%, you’ll earn approximately ₹436,370 in interest alone, resulting in a total of ₹976,370 at maturity.
Meanwhile, if you put in a little more effort and save ₹5,000 every month, your total investment in 15 years will be ₹900,000. This investment will earn you a whopping ₹727,284 in interest, and you’ll have a substantial ₹1627,284 at maturity. This example clearly illustrates how regular investments can grow your capital at a rapid pace.
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Investing ₹8,000 and ₹10,000
If you have a good income and want to build a strong future safety net, a larger investment is a great option. By depositing ₹8,000 every month, your total investment in 15 years will reach ₹1440,000. You earn interest of ₹11,63,654, bringing your total fund to ₹26,03,654.
If you approach the maximum limit and deposit ₹10,000 monthly, you’ll have a substantial corpus after 15 years. Your total investment over this period will be ₹18,00,000, while you’ll earn a substantial ₹14,54,567 in interest. At maturity, you’ll have a substantial sum of approximately ₹32,54,567. This fund is enough to fulfill your old age or your children’s big dreams without any stress.
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PPF Tax Benefits
PPF is considered a powerful tool not only for returns but also for tax savings. Under Section 80C of the Income Tax Act, you can claim a tax deduction on investments up to ₹1.5 lakh annually. Furthermore, the government doesn’t levy a single rupee of tax on the interest earned on PPF. When you withdraw the money after 15 years, the entire amount is tax-free. This is why PPF has always been a safe bet for the middle class seeking a safe investment.