Rs 66 lakh PPF retirement corpus from Rs 1.5 lakh/year investment: How many years it may take for you

For many salaried individuals and long-term investors, Public Provident Fund (PPF) remains one of the most popular options to build a tax-free retirement corpus while also enjoying income tax benefits under the old tax regime. With fixed returns backed by the central government and tax-free maturity proceeds, PPF is often considered a low-risk, long-term wealth creation tool. But how much wealth can you actually accumulate through PPF by investing the maximum permitted amount of Rs 1.5 lakh every financial year?

Investments in PPF of up to Rs 1.50 lakh in a financial year provide tax benefits under the old tax regime. An investor can invest a minimum of Rs 500 and a maximum of Rs 1.5 lakh in a financial year in PPF.

At the current 7.1% interest rate, an investor who deposits Rs 1.5 lakh annually for 20 years in PPF can build a tax-free corpus of over Rs 66 lakh. Out of the maturity amount, nearly Rs 36.58 lakh will come purely from interest earnings. To get the maximum benefit of the PPF interest rate, an investor needs to invest Rs 1.5 lakh every financial year till April 5. The PPF interest rate is also open to quarterly review and the government may change it in the future. For our calculations, we are assuming the PPF rate to be unchanged.
Yearly investment-Rs 1,50,000
Time period- 20 years
Interest rate- 7.1%
Total interest earned-Rs 36,58,288
Maturity value- Rs 66,58,288.

The PPF has a maturity period of 15 years starting from the end of the financial year in which the account was opened.

Account holders can choose to extend their PPF account and keep making deposits for another five years. However, they must decide to extend their account before the end of the one-year period after the maturity period ends.
PPF account holders can continue their account with or without contributing.
If the PPF account remains inactive without any deposits for more than a year, the account holder will not have the option to continue the account with deposits.

Premature closure of a PPF account is allowed after five years from the end of the financial year in which the account was opened, subject to certain conditions. These include cases involving a life-threatening illness of the account holder, spouse, or dependent children; higher education expenses of the account holder or dependent children; or if the account holder’s residential status changes and they become a Non-Resident Indian (NRI).

If a PPF account is closed prematurely, the interest rate applicable on the account will be reduced by 1% from the rate that was credited from the date of account opening, or from the beginning of the current five-year extension block, as applicable.