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New Delhi: Becoming a crorepati is the dream of the masses in India. But for numerous people, this remains a distant dream. However, if an individual is focussed, determined, and dedicated towards achieving this financial dream, it surely can be met. Public Provident Fund (PPF) is a government-controlled scheme which can help people to build a huge corpus. And above all, the long-term scheme does not need a lump sum investment to create a pool of over Rs 1 crore. It is not a market-linked scheme and the returns are guaranteed.
Currently, the government has fixed 7.1 per cent interest rate for the Public Provident Fund scheme. The rate of interest is almost in sync with several bank deposits. And the most important part is the returns are not taxable under Income Tax. Also, the depositor can claim tax exemption on the amount deposited during a financial year under section 80C deductions.
Let us assume that a 25-year-old starts investing in a PPF account with an investment of Rs 1,50,000 every financial year. It may be noted that a depositor is not allowed to invest more than Rs 1.5 lakh in a financial year. When we use a PPF calculator to see what amount of corpus will be built if the depositor invests for 25 subsequent years, here’s what the estimates show at the current rate of interest.
Investment amount: Rs 1,50,000
Duration: 25 years
Interest Rate: 7.1 percent
Invested amount: Rs 37,50,000
Total Interest: Rs 65,58,015
Maturity Value: Rs 1,03,08,015
Generally, a PPF account matures on completion of 15 complete financial years from the end of the year in which the account was opened. However, the depositor is allowed to extend the tenure by 5 years with future deposits after the PPF lock in period is over.
