Public Provident Fund (PPF) is such a thing in which a working person invests keeping in mind his retirement goal. So that after retirement his life goes on well. According to the Income Tax Act, one’s PPF investment, PPF interest rate and PPF maturity are tax free. Hence PPF account not only helps the investor to accumulate retirement corpus but also helps in saving tax while filing income tax return.
Speaking to Zee Business, Manikaran Singhal, Founder, Goodmoneying.com, on Income Tax Rules applicable to PPF account said, “PPF investment comes under EEE category as PPF investment up to Rs 1.5 lakh in a particular financial year as income tax under section 80C. is free from. The PPF interest earned in one’s PPF and PPF maturity amount is free from any income tax liability. However, a PPF account holder cannot invest more than Rs 1.5 lakh in his PPF account and cannot have more than one PPF account.
Sebi registered tax and investment expert Jitendra Solanki told Zee Business, “The maturity period of PPF account is 15 years but the PPF account can be extended by submitting Form-16H in the last year of PPF maturity. This PPF account extension can be done in blocks of 15 years. year and there is no restriction on the number of times a person can extend his PPF account.
Assuming that one invests in a PPF account for 30 years (using Form H, 15th year, 20th and 25th year) and the PPF interest rate for the entire tenure is 7.1 percent. According to the PPF calculator, the PPF maturity amount after 30 years will be Rs 1,11,24,656 or Rs 1.11 crore. If he invests Rs.1,08,000 in a year (Rs.9 thousand per month).
In this 30 year investment of PPF, one will invest Rs 32,40,000. Whereas the PPF interest earned during the entire investment period will be Rs 78,84,656. Hence, at a PPF interest rate of 7.1 per cent, one’s Public Provident Fund account can help one become a millionaire.