PPF is a government scheme that gives safe and guaranteed returns, in which investment can be started with just ₹ 500. By investing up to ₹ 1.5 lakh every year, tax free interest and a strong savings fund can be created in the long term.
Nowadays everyone wants to invest their money in a scheme that gives safe and good returns. So if you also want that your hard earned money remains safe and you can also get good interest on it, then Public Provident Fund (PPF) is an excellent option for this. PPF is a government guaranteed scheme in which you can start investing with just ₹ 500 and can invest a maximum of ₹ 1.5 lakh every year.
The most special and surprising thing is that there is a way in PPF by which you can earn interest of up to ₹ 2.88 lakh without investing even a single new penny. But the only condition is that you have invested regularly for 15 years.
What is the whole funda of investment?
Let us tell you that if you invest ₹1.5 lakh every year for 15 years in PPF, then a total of ₹22.5 lakh will be deposited. On this, you can get interest of about ₹18.18 lakh at the rate of about 7.1% per annum, according to which your fund can increase to ₹40.68 lakh on maturity. But now the special thing is that this fund can be kept in PPF even further without adding new amount, due to which interest of up to ₹2.88 lakh will be available every year. That is, by investing once, you can earn free income annually in the future and that too completely tax free.
Understand the game of PPF Extension Without Contribution
By the way, if an investor has invested in PPF without stopping for 15 years and the scheme has matured, then it is not necessary that you withdraw the money immediately. Actually, you can extend this account even further without adding new money, which is called “PPF Extension Without Contribution”. No application is required for this extension of PPF, if you do not withdraw the money, then this facility starts automatically. The good thing is that in this extended period, interest keeps getting added every year on the deposited amount, and you can withdraw the entire amount whenever you want.
How to get ₹2.88 lakh
If an investor deposits ₹1.5 lakh every year for 15 years in PPF, then a fund of about ₹40.68 lakh can be created on maturity. So now if you let this fund remain in the PPF account and do not add any new amount, then also this amount can earn about ₹2.88 lakh interest every year at 7.1% interest. Yes, this can be considered a way of earning without any hard work. As long as the money remains in the PPF account, interest can be earned on it. This is the reason why this scheme gives an opportunity for great returns in the long term even without investment.
Benefits of 5-5 year blocks
Yes, the PPF account can be extended after maturity not only without investment, but also with investment. However, for this it is necessary that the investor can request for extension through the form within one year of the account maturity. When you choose extension with contribution, the PPF account is extended for 5 years straight. The good thing is that you can avail this facility any number of times — in blocks of 5 years each time. It is an excellent option for tax-free savings in the long term. (Note: This article is for information purposes only and should not be construed as investment advice in any way, it is recommended to consult a financial advisor for investment)
FAQ
Q1. What is PPF and why is it considered a safe investment option?
A1. PPF is a government-guaranteed long-term savings scheme that offers tax-free interest, making it a safe option for investors.
Q2. Can I start investing in PPF with a small amount?
A2. Yes, you can start investing in PPF with just ₹500 per annum and invest up to ₹1.5 lakh annually.
Q3. What is the interest rate in PPF and how is it decided?
A3. Currently, PPF offers 7.1% annual interest, which is decided by the government after reviewing it every quarter.
Q4. Is the interest received from PPF tax free?
A4. Yes, the interest received in PPF is completely tax free and it comes under the EEE (Exempt-Exempt-Exempt) category.
Q5. Is there a lock-in period in PPF?
A5. Yes, the lock-in period of PPF is 15 years, but partial withdrawal and loan facility is available after a few years.
