A Public Provident Fund (PPF) is a plan for creating a corpus for post-retirement life by making regular deposits of a certain amount of money. In accordance with the regulations, a deposit of Rs 100 can be used to start a PPF account at any bank or adjacent post office. A minimum of Rs 500 must be deposited into the account each year.
PPF accounts fall under the exempt-exempt-exempt classification, which entitles taxpayers to the Section 80C income tax break on the annual deposit of 1.5 lakh. The maximum amount that can be deposited in a single deposit—or a maximum of 12 instalments—during the 15-year lock-in term is 1.5 lakh.
How to save Rs 1 crore in PF account?
On a quarterly basis, a PPF account will accrue interest at a rate of 7.1%. If someone is disciplined about investing money each year, they may end up saving Rs. 1 crore when the investments reach maturity.
The PPF account has a 15-year maturity limit, but Jitendra Solanki, a tax and investment specialist registered with SEBI, informed the Hindustan Times’ sister website Livemint that the account can be extended in blocks of five years indefinitely. That implies that a shareholder may keep using the PPF option without taking a cash withdrawal. The depositor has the choice of extending the PPF account with an investment or without one for the following five years.
Some experts do, however, advise choosing the PPF account extension with investing option. In order to receive interest on both the PPF maturity amount and the new investment, Kartik Jhaveri, director of wealth at Transcend Consultants, advises choosing an extension with investment.
If a person with income establishes a PPF account at the age of 30 and, following the required 15-year locking period, increases their investment by 15 years three more times, they will have invested for a total of 30 years. Let’s assume that a PPF account receives 1.5 lakh in annual investments. If the interest rate stays at 7.10% per year for the full 30 years, the final maturity amount will be 1.54 crore.
