Public Provident Fund Calculation for Rs 1 crore: Public Provident Fund (PPF) is viewed as a great investment selection. Not just revenue tax positive aspects, the interest earned as properly as final maturity quantity on PPF deposits are tax totally free. However, not all investors are conscious of how interest is calculated on PPF investment. Over a lengthy period of time, an investor can accumulate Rs 1 crore and even more by means of PPF. But to accumulate this significantly quantity it is vital to know when is the greatest time to invest, no matter whether lump sum investment or month-to-month investment is more effective, and how the interest will be calculated on your deposits.
Since last year, the government has kept the PPF interest price unchanged at 7.1%. On March 30, 2020, the government had announced a steep reduce in the interest prices on smaller savings schemes like PPF.
The interest on PPF balance is calculated on a month-to-month basis. However, it is credited to the account of the subscriber only at the finish of the monetary year (March 31).
PPF calculation
For calculation objective, the minimum balance in the PPF account among the fifth and the finish of each and every month is viewed as. This signifies, if a subscriber invests soon after the 5th day of a month, then he will get interest on the prior month’s balance. However, if you invest prior to the 5th day of a month, you will get interest interest on the existing month’s balance also, along with the prior month’s balance.
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If you want to attain your target of Rs 1 crore by means of PPF quickly, you really should contemplate depositing revenue in the account prior to 5th day of a month.
Now, let us look at how significantly you require to invest just about every month to accumulate Rs 1 crore with PPF.
At the existing 7.1% interest, your PPF account will have a corpus of about Rs 40 lakh soon after 15 years if you invest Rs 1.5 lakh per year (or Rs 12,500 per month in PPF account.) This is whilst assuming that the interest price remains unchanged for 15 years. It is vital to note right here that PPF interest price is revised by the government on a quarterly basis. Hence, the PPF interest price may possibly go up or down by means of the investment period.
Note: One can invest a maximum of Rs 1.5 lakh and minimum Rs 500 in PPF account in a year.
According to the Public Provident Fund Scheme 2019 guidelines, you can extend the PPF account in a block of 5 years. To get Rs 1 crore, you will have to preserve extending your account. So, if you extend your account for 5 years soon after maturity period of 15 years, your corpus would be about Rs 66 lakh at the finish of 20 years (assuming 7.1% interest). If you extend your account for a further 5 years, you will get about Rs 1 crore soon after 25 years.