PPF Calculations: How to get Rs 40,000 tax-free lifelong monthly income, withdraw Rs 93 lakh retirement corpus by 56 years of age

PPF Calculations: Public Provident Fund (PPF) is a long-term small savings scheme often used for retirement corpus building. But if one invests regularly in the fixed income scheme for a long term, they can draw a substantial monthly income from the scheme. They can also build a corpus that they can use themselves or pass on to their children. If one uses the full limit of Rs 1.50 lakh investment in a financial year in PPF, they can withdraw a tax-free lifelong income of over Rs 39,000 and withdraw a retirement corpus of nearly Rs 93,00,000 by the age of 56. Know how it may work out for you!

How to make PPF investment

One can open a PPF account in a bank or a post office with a minimum deposit of Rs 500. They need to deposit at least that amount to continue their PPF account. 

Tax-free status of PPF scheme

The interest earned and the corpus created from PPF investment are tax-free.

The old tax regime also provides tax benefits on PPF deposits up to Rs 1.50 lakh a financial year under Section 80C of the Income Tax Act. 

PPF interest rate and maximum investment 

The PPF interest rate is 7.1 per cent compounded yearly.

The maximum investment in a year is Rs 1.50 lakh.

One may invest monthly or any number of times in a financial year.

The interest amount is credited on March 31 of every financial year.

To get the maximum PPF interest benefit, one needs to invest Rs 1.50 lakh from April 1 to 5.

PPF account maturity

A PPF account has a maturity period of 15 years.

On completion, an account holder can withdraw the entire corpus or may extend the account for a block of 5 years with or without deposits.

In either case, they will keep getting interest. Banks and the post office offer unlimited extensions of 5 years each. 

In the extended account with deposits, 1 withdrawal can be taken in each financial year subject to a maximum limit of 60 per cent of the balance credit at the time of maturity in the block of 5 years.

How to get Rs 1.55 crore corpus

For this, an investor will invest Rs 1.50 lakh every financial year for 15 years.

In 15 years, the total investment will be Rs 22,50,000, the estimated interest will be Rs 18,18,209 and the estimated corpus will be Rs 40,68,209. 

Now, we will take 3 extensions of 5 years each and keep investing Rs 1.5 lakh every year between April 1 and 5.

PPF corpus after 30 years

In 30 years, the total investment will be Rs 45,00,000, estimated interest will be Rs 1,09,50,911, and the estimated corpus will be Rs 1,54,50,911.

60% withdrawal of corpus (worth over Rs 92 lakh)

At this stage, if we withdraw a 60 per cent corpus, the withdrawn amount will be Rs 92,70,546.6, and the estimated balance will be Rs 61,80,364.4.

Corpus after 31 years

If we let the corpus grow for a year, the estimated corpus after a year will be Rs 66,19,170.27, where the estimated interest will be Rs 4,38,805.8724.

How to get over Rs 39,000/month income

If you draw just the interest from this corpus every year, the estimated amount will be 4,69,961.09, which will be equal to Rs 39,163.42.

Conclusion

If an investor starts investing in PPF from the age of 25 years, they may achieve these goals by 56 years of age.

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)