More News : The Public Provident Fund (PPF) is one of the government-backed small savings schemes available through post offices. It is considered a popular long-term investment option because of its government-backed nature, tax benefits and compound interest.
Investors can deposit up to ₹1.5 lakh in a financial year. With regular investment and extensions beyond the original maturity period, the fund can grow to over ₹1 crore based on the interest rate used in the calculation.
Government-Backed Investment with Tax Benefits
The PPF Scheme is a government-backed savings option designed for long-term investment. Investments made in the scheme are eligible for tax deductions of up to ₹1.5 lakh under Section 80C, subject to applicable tax rules.
The scheme is also known for its EEE tax treatment, under which contributions, interest and maturity proceeds are eligible for tax benefits as per prevailing rules.
Interest Rate and 15-Year Maturity
The PPF account has an original maturity period of 15 years. After maturity, investors can extend the account in blocks of five years.
The calculation in this example uses an annual interest rate of 7.1%. Interest rates for small savings schemes are subject to periodic review.
Investment Starts at ₹500
An investor can open a PPF account with a minimum annual investment of ₹500. The maximum investment allowed in a financial year is ₹1.5 lakh.
A PPF account can also be opened for a minor and operated by a guardian. However, the scheme does not provide a joint account facility.
How Much Can Be Built in 15 Years?
If an investor deposits ₹1.5 lakh every year for 15 years, the total contribution will amount to ₹22.50 lakh.
According to the calculation provided, the total fund, including interest, can grow to around ₹40.68 lakh at the end of the maturity period.
How the Fund Can Cross ₹1 Crore in 25 Years
After completing the original 15-year maturity period, an investor can take two extensions of five years each and continue the investment for a total of 25 years.
According to the given calculation, if the investment continues under this structure, the total contribution would be ₹27.50 lakh, while the accumulated fund could reach approximately ₹1,03,08,015.
The interest component in the total corpus could amount to around ₹65.58 lakh, helping the overall fund cross the ₹1 crore mark.
