PPF: The interest rate of Public Provident Fund (PPF) scheme is stuck at 7.1% with effect from 1st April 2020. The government has revised the interest rates of many small savings schemes in three years, but there has been no change in the interest rate on PPF.
PPF: The interest rate of Public Provident Fund (PPF) scheme is stuck at 7.1% with effect from 1st April 2020. The government has revised the interest rates of many small savings schemes in three years, but there has been no change in the interest rate on PPF. The government has recently clarified that there is no plan to increase the interest on PPF. Even before this the average PPF interest rate has been around 8%. Even though the rate of interest now available on PPF deposits is lower, but the benefits available on it remain the same as before. It is tax exempt and both the principal and the interest received on maturity are tax free. This is the reason why these long term plans attract them to invest.
PPF account can be opened anywhere
PPF is currently getting 7.1 percent interest. You can open Public Provident Fund (PPF) account in any post office or bank branch. This account can be opened with just Rs.500. In this, you can deposit up to a maximum of Rs 1.50 lakh annually. The maturity period of this account is 15 years. However, after maturity it can be extended for 5-5 years.
You can become a millionaire by investing Rs 12,500 every month in PPF
If you deposit Rs 12,500 every month in PPF account and invest it for 15 years. So you will get a total of Rs 40.68 lakh on maturity. Your total investment in this will be Rs 22.50 lakh, while your income from interest will be Rs 18.18 lakh. This calculation has been done on the basis of 7.1% annual interest for the next 15 years. The maturity amount can change if the interest rate changes. Interest in PPF is available on compounding basis.
How to become PPF Crorepati
If you want to become a millionaire from this scheme, then after 15 years you have to extend it 2 more times for 5-5 years. That is, now your investment period will be 25 years. After 25 years, you will get a total of Rs 1.03 crore. Your total investment in this period will be Rs 37.50 lakh, while you will get Rs 65.58 lakh as interest income. Keep in mind that if you want to extend the PPF account, then you have to apply one year before maturity. The account will not be carried forward after maturity.
Get tax exemption
The biggest advantage of the PPF scheme is that it is tax exempt under section 80C of the Income Tax Act. In this scheme, you can take a rebate on investment up to Rs 1.5 lakh. The interest earned on PPF is also not taxed. The most important thing is that the government promotes small savings schemes. Therefore it is completely safe to invest in it.
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