PPF Calculator: Know how much to invest per month to get a tax-free maturity amount of ₹1 Cr

A government-backed investment option known as the Public Provident Fund (PPF), falls under the post office's small savings scheme category and is one of the well-liked choices for long-term investors looking to obtain returns that are guaranteed and tax-free. The PPF interest rate is altered by the government every quarter; at the moment, it is higher than the fixed deposit rates offered by the biggest banks at 7.1% (compound annually). The PPF is regarded as a long-term investment because of its 15-year maturity period, omitting the financial year of account establishment. At maturity, PPF contributions allow for the accumulation of up to Rs. 1 Cr in tax-free income, but one must be conscious of the investment amount.

PPF Calculator

For the following 15 years, we can assume an interest rate of 7.1% to build a corpus of Rs. 1 Cr at maturity. According to calculations provided by ETMoney, an individual can maintain a total invested amount of 63 lacs in his or her PPF account by investing 35,000 every month for 15 years. For this, he or she will receive 47.45 lacs as interest income, and the total amount will be approximately 1.10 Cr at maturity.

Let's say that the same investor wants to continue contributing monthly to their PPF account to receive a 2 Cr maturity payout. If you keep this example in mind, you can extend your PPF account without making any withdrawals at maturity for successive blocks of 5 years, and so on, up until one year after the account's maturity. Upon account maturity, the account holder has the option to extend the account for a further 5 years, bringing the entire investment period to 20 years. In light of this, the account holder will need to continue making monthly contributions of 40,000 for an additional five years, which will result in a total investment of 96 Lacs, interest income of 1.11 Cr, and a total maturity amount of 2.07 Cr at maturity after 20 years from the date of account opening. 

Key takeaways of PPF

First and foremost, PPF maintains its exempt-exempt-exempt (EEE) status, which means that your investment, returns, and maturity are all tax-free. A single adult resident Indian, a guardian acting on behalf of a minor, or a person of unsound mind may open a PPF account by investing INR 500 or INR 1,50,000 in a financial year. PPF interest is based on the lowest amount in the account between the fifth day's closing and the end of the month and is subject to the quarterly announcements issued by the Ministry of Finance.

A subscriber may withdraw up to 50% of the account amount once every fiscal year after five years—other than the year the account was opened. Premature closure is allowed in specific emergencies after five years have passed since the account's creation. You cannot take out a loan against a PPF account until one year has passed from the end of the fiscal year in which the initial subscription was made. The account holder has three choices when the PPF account approaches maturity: withdraw the maturity payment, keep the maturity value in the account without making any deposits, or extend the account for a second five-year block.