PPF Account: Do you want to become a crorepati without any risk and without paying taxes? Know how investing ₹12,500 every month in PPF can give you ₹2.26 crores on retirement. See the complete calculation, rules and comparison with ELSS in this guide.
PPF Account: Do you want to become a crorepati? As soon as you hear this question, the fluctuations of the stock market, the risk of mutual funds and the hassle of property start circling in your mind. But what if I tell you that there is a ‘magical’ government treasury, where you can become a crorepati without any risk, even while sleeping peacefully? And the biggest thing – the government will not charge even ₹1 tax on your earnings!
Yes, this is not a dream, but a reality. And the name of this government treasury is PPF (Public Provident Fund). It is not just an investment scheme, but an ‘Akshaya Patra’, in which whatever you put, it comes back manifold by the power of compounding.
Today we will show you step-by-step how investing just ₹12,500 in PPF every month can make you the owner of ₹2.26 crores at the age of 60.
What is PPF and when did it start?
The Public Provident Fund (PPF) was started by the Government of India in 1968. Its main objective was to provide a small savings scheme to the common people in which they can create a large fund for their long-term goals, such as children’s education, marriage or retirement, by adding a little money. Its biggest feature is its security and tax benefits, because it is guaranteed by the government.
Why is PPF considered the ‘Brahmastra of investment’?
The biggest reason behind the popularity of PPF is its EEE (Exempt-Exempt-Exempt) status. It is considered ‘Brahmastra’ in the world of finance.
First E (Exempt): You get full exemption under Section 80C of Income Tax on the investment of up to ₹1.5 lakh every year.
Second E (Exempt): The interest (currently 7.1%) you get every year on your investment is also completely tax-free.
Third E (Exempt): After 15 years or whenever you withdraw the entire amount on maturity, there is no tax on that amount.
That means, earn, save and pay no tax on it.
Complete calculation of becoming a crorepati: How will your money grow?
Let us now understand the mathematics that turns your small investment into crores. Suppose, you are 25 years old and you start investing ₹12,500 every month (i.e. ₹1.5 lakh annually) in PPF.
(Based on current interest rate of 7.1%)
| Years of investment | Age | total investment | Total Interest | Maturity Amount |
| 15 years (first maturity) | 40 years | ₹22.50 lakh | ₹18.18 lakh | ₹40.68 lakh |
| 20 years (first extension) | 45 years | ₹30.00 Lakh | ₹36.58 lakh | ₹66.58 lakh |
| 25 years (second extension) | 50 years | ₹37.50 lakh | ₹65.58 lakh | ₹1.03 crore |
| 30 Years (3rd Extension) | 55 years | ₹45.00 Lakh | ₹1.09 crore | ₹1.54 crore |
| 35 years (4th extension) | 60 years | ₹52.50 lakh | ₹1.74 crore | ₹2.26 crore |
You see, at the age of 60, you will have ₹2.26 crores in your account, of which the money you invested is only ₹52.50 lakh, while ₹1.74 crores is just the interest earned! This is the real power of compounding.
How to extend PPF account? ‘Extension’ rule
You might be thinking that PPF matures in 15 years, so how will it last for 35 years?
The answer to this is the ‘extension’ feature of PPF. After completion of 15 years, you can extend your PPF account any number of times in blocks of 5 years each. If you want, you can continue it without depositing money (on which interest will continue to accrue) or you can grow it faster by continuing to invest every year.
PPF vs ELSS: Safety or Higher Returns?
People often ask whether to invest in PPF or ELSS (Equity Linked Savings Scheme) mutual funds?
| Features | PPF (Public Provident Fund) | ELSS (Equity Linked Savings Scheme) |
| Risk | Zero risk, Government guaranteed | Market risk, no guarantee of returns |
| Return | Fixed returns (currently 7.1%) | Estimated 12-15% (market dependent) |
| Tax exemption | Completely Tax-Free (EEE) | 80C exemption on investment, 10% tax on profits |
| Lock-in | 15 years | 3 year |
| For whom? | Those who want safe and guaranteed returns | Those who can take risks for higher returns |
Conclusion: Powerful, Secure and Tax Free
PPF (Public Provident Fund) is a very powerful, safe and tax-free long-term investment option in India. Its compounding power and EEE tax status make it attractive. A disciplined investor can create a tax-free corpus of over Rs 2.26 crore in 35 years by investing just Rs 12,500 every month without any risk. It is an ideal scheme for those who want to build a large and secure corpus for their retirement.
Frequently Asked Questions (FAQs)
Q1: Who can invest in PPF?
A: Any Indian citizen, including children, can open a PPF account.
Q2: What is the minimum and maximum amount you can invest in PPF?
A: You can invest a minimum of ₹500 and a maximum of ₹1.5 lakh in a financial year.
Q3: What is the maturity period of PPF?
A: Its maturity period is 15 years, which can be extended any number of times for 5-5 years.
Q4: What is the current interest rate on PPF?
A: Currently, PPF is offering interest at the rate of 7.1% per annum (this may change every quarter).
Q5: Is the entire amount received from PPF tax-free?
A: Yes, PPF is completely tax-free (EEE) at all three levels – investment, interest and maturity.
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