Public Provident Fund: Target Rs 1 crore?

Public Provident Fund: Target Rs 1 crore? You need Rs 362 for 365 days For 25 Years

 

How to become a crorepati with Public Provident Fund (PPF)?

Is this question on your mind?

To achieve this financial goal, you may need a lot of patience and an investment of at least Rs 1,32,000/year for 25 years at the current rate of interest. To accumulate this annual investment amount, you need to save at least Rs 362 per day (1,32,000/365=361.64). Currently, PPF is offering 7.9 per cent interest, which is compounded annually. This interest is revised by the government quarterly. It has remained around 8 per cent in the last five years.

Calculation shows that by investing Rs 1,32,000 per year in PPF for 15 years, you can get around Rs 38 lakh if the interest rate remains at 7.9 per cent during the investment period.

PPF: How to reach Rs 1 crore?

Fifteen years is the mandatory lock-in period for PPF. However, rules allow further extension of the account in blocks of five years each. PPF account can be extended within one year of the date of maturity. You should apply for extension of the account by 1st April of the 16th Financial Year in Form-H. After completion of the five years, you can once again apply for extension.

"A subscriber may, on the expiry of 15 years from the end of the year in which the initial subscription was made but before the expiry of one year thereafter, may exercise an option with the Accounts Office in Form H, or as near thereto as possible, that he would continue to subscribe for a further block period of 5 years according to the limits of subscription …," say PPF rules 1968.

If you open the PPF account today (November 27, 2019), it will mature on March 31, 2034. You will be allowed to apply for extension between April 01, 2033 and March 31 2034.

The application for extension of PPF account is first verified for authenticity of the subscriber by the post office or banks before proceeding the request further.

’If you don’t withdraw the lump sum of approx Rs 38 lakh and continue to invest Rs 1,32,000 for another 10 years, your total lump sum will grow over Rs 1 crore at the current rate of interest.

PPF Extension without deposits

As per the PPF rules, the account can also be extended beyond the maturity period without further deposits. Such accounts continue to earn interest. Also, the depositor is allowed to make one withdrawal in a financial year with no restriction on the amount.

In case the account has been extended with deposits through Form-H, PPF rules allow withdrawal of maximum 60 per cent of the balance at the time of extension of the account. This limit continues to apply on commencement of every extension of five years.

 

 Happy Investing