Winning Bizness Desk
Mumbai The Centre has kept interest rates on small savings schemes unchanged for Q2FY26. PPF continues to offer 7.1% annual interest. With the right strategy, it remains one of the safest options to build a retirement fund.
How the 15+5+5 investment formula works
If you invest ₹1.5 lakh annually in PPF for 15 years and then extend the account twice by 5 years each, your fund can grow to ₹1.03 crore in 25 years. The PPF account allows tax-free returns, with interest compounded annually.
* Years 1–15: You invest ₹1.5 lakh annually: Total investment = ₹22.5 lakh. With 7.1% compound interest, the fund grows to ₹40.68 lakh.
* Years 16–20 (no new investment): Amount grows to ₹57.32 lakh through interest alone.
* Years 21–25 (no new investment): Final corpus becomes ₹80.77 lakh.
* If continued investment is made for all 25 years: ₹37.5 lakh total investment results in ₹1.03 crore corpus. Interest earned = ₹65.58 lakh.
How you get ₹61,000 monthly without touching the fund
Once you reach ₹1.03 crore at the end of 25 years, leaving it in the PPF account earns you annual interest of ₹7.31 lakh at 7.1%. That’s about ₹60,941 per month. The principal remains intact while you get a steady, tax-free monthly income.
Tax-free benefits from start to finish
PPF gives full tax exemption under Section 80C for up to ₹1.5 lakh investment annually. Interest and maturity amounts are also completely tax-free. You get triple tax benefits—on investment, interest earned, and maturity.
Questions & Answers:
Q: What is the 15+5+5 formula in PPF investment?
A: It means investing for 15 years and extending the account twice for 5 years each—either with or without additional investment.
Q: How much will I earn monthly after 25 years?
A: About ₹61,000 per month as interest if your fund reaches ₹1.03 crore and you don’t withdraw the principal.
Q: Is the interest on PPF taxable?
A: No. Interest, investment amount, and maturity—everything is tax-free under Section 80C.
Q: Can I invest more than ₹1.5 lakh per year?
A: No. That’s the maximum limit. Anything above that won’t earn interest or tax benefits.
Q: Who can open a PPF account?
A: Any Indian citizen. Parents can also open accounts on behalf of minors.
Q: Can I withdraw before 15 years?
A: Full withdrawal isn’t allowed before 15 years, but partial withdrawal (up to 50%) is permitted from the 7th year.
Q: What if I want to continue the account after 15 years?
A: You can extend it in blocks of 5 years—with or without further contributions.
Summary Points:
- Government kept PPF interest at 7.1% for July–September quarter
- With the 15+5+5 formula, ₹1.03 crore corpus can be created in 25 years
- Annual investment needed: ₹1.5 lakh
- Monthly income of ₹61,000 from interest after maturity
- Entire earnings—investment, interest, and maturity—are tax-free
- PPF suitable for salaried, housewives, and small business owners
- PPF account can be opened in any bank or post office, even for a minor
