Public Provident Fund (PPF) is a way to set aside money on a monthly basis in order to create a corpus for post-retirement living. According to the rules, a PPF account can be opened at any bank or nearby post office with a deposit of Rs 100. Each year, a minimum of Rs 500 has to be placed into the account.
PPF accounts fall under the exempt-exempt-exempt classification, entitling taxpayers to the Section 80C income tax benefit on the yearly deposit of 1.5 lakh. During the 15-year lock-in term, a deposit of up to 1.5 lakh rupees can be made in a single deposit or a maximum of 12 instalments.
How to save Rs 1 crore in the PF account?
A PPF account will accumulate interest at a rate of 7.1% on a quarterly basis. When investments mature, someone who is persistent in making investments each year might end up saving Rs. 1 crore.
The PPF account has a maximum maturity of 15 years, but according to some media reports, the account can be extended in increments of 5 years forever. Hence, it would seem that a shareholder might continue to use the PPF option without making a cash withdrawal. The depositor has the option of extending the PPF account for the subsequent five years with or without making an investment.
The PPF account extension with an investment option is nonetheless recommended by certain experts. An expert suggests selecting an extension with the investment so that interest may be earned on both the PPF maturity amount and the new investment.
If a person with income opens a PPF account at the age of 30 and raises their contribution by 15 years three more times after the mandatory 15-year locking period, they will have contributed for a total of 30 years. Let's say a PPF account receives 1.5 lakh in investments each year. The total maturity amount will be 1.54 crore if the interest rate remains at 7.10% annually for the entire 30 years.
