PPF: Public Provident Fund (PPF) is the most successful and profitable savings scheme. PPF comes with a guarantee from the government. That is, the government guarantees the return on it.
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According to Section 80C of Income Tax, a PPF account holder can get this tax exemption. However, a maximum exemption of Rs 1.50 lakh will be available annually on a financial year. PPF is among some of the lowest risk schemes offering better returns to the investors.
Government pays 7.1 percent interest on PPF
The government is giving a return of 7.1 per cent on PPF. The interest rate of PPF is subject to change every quarter as per the instructions of the government. That is, after every three months, the government decides the interest received on the savings scheme scheme. If we look at its past trend, then the interest rates on PPF are going to remain at 7.1 per cent or above.
This is how you can become a millionaire
At the age of 25, if you start investing Rs 5000 every month in PPF, then your annual investment will be Rs 60,000. You will earn an interest of Rs 7,27,284 in 15 years at 7.1% interest rate. Your total investment in 15 years will be Rs 9,00,000. Maturity of 15 years means when you will be 40 years old then you will get Rs 16,27,284.
This is how PPF can make a millionaire
However, if you maintain this investment of Rs 5,000 per month for 37 years, you will get a return of Rs 83,27,232 on a total investment of Rs 22,20,000. You will get Rs 1,05,47,232 on maturity. As mentioned earlier, the maximum maturity period of PPF is 15 years. If you want to extend it up to 37 years, you need to fill Form 16-H, Renewal Form at the end of 15th, 20th, 25th, 30th year. Your PPF account will be renewed after this.
Many benefits are available on PPF
The government decides the rate of interest on PPF. Up to Rs 1.5 lakh can be invested in this scheme. Investors investing in PPF get tax benefits in three ways. Apart from the benefit of tax deduction on the money invested in PPF, there is no tax on the interest and maturity amount.
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