PPF Interest Rate 2022: Public Contingency Fund Calculation – Want Rs 1 crore? Check the rules

PPF Interest Rate 2022, How to Calculate Interest on PPF Balance: Not only generally higher than FD yields, the PPF scheme comes with several advantages for the common man.

Public provident fund – PPF interest rate 2022-23; Calculation and last rules: The Public Provident Fund is a long-term investment option backed by a sovereign guarantee. Not only generally higher than FD yields, the PPF program comes with several advantages for the common man.

Anyone can open a PPF account with as little as Rs 500 and invest up to Rs 1.5 in the PPF account during a fiscal year. Whether you are an employee, manager of a small or large company, self-employed, self-employed, self-employed or in any type of work, you should consider the PPF as an instrument that guarantees the security of your hard-earned investment and gives back an annual return. healthy compound.

You can use the PPF account to accumulate wealth for the long term. People who are not covered by the Employee Provident Fund (EPF) can also use the PPF as a long-term retirement planning option.

Read on to learn about several great benefits and features of PPF.

Can you get Rs 1 crore with PPF?

For long-term investors, the PPF is a safe option. Not only the tax benefits, you can actually create a corpus of Rs 1 crore or more via PPF.

The current PPF interest rate offered by the government on the PPF is 7.1% compounded annually. Assuming this rate stays the same, a deposit of Rs 1.5 lakh per year would earn you close to Rs 40 lakh in 15 years. Investors have the option to extend the PPF account in blocks for 5 years after the completion of the mandatory 15-year maturity period.

Thus, investing Rs 1.5 lakh / year in the PPF account for 20 years would result in a corpus of approximately Rs 66 lakh. If you keep investing Rs 1.5 lakh / year for another five years, your PPF balance will reach approx. Rs 1 crore in 25 years. You can achieve this faster if the government reviews and increases the interest rate during the investment period. (Learn more about this PPF calculation here)

PPF 2022 interest rate

The PPF interest rate is revised quarterly by the government. The current interest rate is 7.1% and should be revised by the end of December 2021 (Check for an update on the PPF 2022 interest rate soon).

In the past, PPF deposits have earned higher interest, even up to 12%. (Read the history of PPF interest rates since 1968)

PPF deadline, closing / withdrawal rules

The PPF account expires after the expiration of a period of 15 years from the end of the financial year during which the account was opened. PPF account holders can extend their account in blocks of 5 years each after maturity.

The premature closure of the PPF account before 15 years is generally not advised. However, you can close the PPF account prematurely after the completion of 5 years for specific purposes like medical treatment, children’s higher education, etc.

Also check: the latest NSC interest rate and how it is calculated

From the 7th year, only one withdrawal is allowed per year. However, the maximum withdrawal can be 50% of the balance amount at the end of the fourth year or the previous year, whichever is less.

Calculation of the PPF 2022 interest rate: How to get the most out of the PPF?

Interest on PPF deposits is calculated monthly but credited to the account at year end. Interest is calculated between the fifth and the last day of a month. So, to maximize returns, you need to invest in a PPF account no later than the 5th day of a month. This will earn you interest on the current month’s balance, in addition to the previous month’s balance.

If you invest a lump sum in a PPF account over the course of a year, the ideal option for maximum return would be to make the deposit between April 1 and April 5 of a fiscal year.

What is special about PPF?

The PPF enjoys judicial immunity. The level of guarantee of your money in a PPF account is such that it cannot be attached to paying off debts through a court order.

Where to invest in a public provident fund or open a PPF account

An account of the Public Provident Fund can be opened at the Post Office and also with some banks.

Only one PPF account can be opened by a person in their name. You can open separate PPF accounts for each member of your family. You can also open separate PPF accounts for each of your dependent children. However, for tax benefits, the combined contribution from you in these accounts should not exceed Rs 1.5 lakh.

A parent is allowed to open a separate minor PPF account in their child’s name in addition to the account in their own name.

Eligibility for opening a PPF account

An individual is authorized to open an account with the Public Provident Fund at any age. You can also open a PPF account in the name of your minor child (ren). HUFs are not allowed to open a PPF account. NRIs can have the PPF account provided the account was opened while they were Permanent Resident Indians.

What if you have two PPF accounts?

A natural person is not authorized to open more than one PPF account in his name. If a person has opened two PPF accounts, one of them must be closed. If the total of deposits on the two accounts is within the prescribed maximum limit, they can be merged into one account chosen by the investor. If the amount exceeds the prescribed deposit limit of Rs 1.5 lakh per year, the excess amount will be refunded to the account holder without any interest.

If there is an outstanding loan in any of the PPF accounts to be merged, the depositor must repay the full amount plus interest must be repaid before the accounts are merged.

According to the rules, if a depositor has opened more than one PPF account, the second and subsequent accounts are treated as irregular.

Tax advantage on the PPF deposit

PPF deposits enjoy tax advantages under section 80C of the Income Tax Act. The maximum deduction you can claim under this section is Rs 1.5 lakh per year. It is important to note that there are several other instruments which also enjoy benefits under section 80C. For a tax benefit, the combined deposits under all of these instruments should not exceed Rs 1.50 in a fiscal year. (Check out the top 10 investment options under section 80C)

PPF benefits from “exempt-exempt-exempt (EEA)” tax status. Investors do not have to pay tax on the amount deposited into the PPF account (subject to an annual limit), the interest received and the amount withdrawn at maturity.

Key features of the PPF

  • Sovereign guarantee
  • Legal immunity
  • No tax on investment, interest and returns
  • Loan facility
  • Invest as little as Rs 500 / year

How much money you can deposit in PPF

The maximum investment limit in a PPF account per year is Rs 1.5 lakh and the minimum deposit amount is Rs 500. You can deposit money into your PPF account 12 times per year.

According to Sudhakar Sethuraman, partner of Deloitte India, post offices accept cash up to Rs 50,000 per day. He says that a cash deposit of over Rs 1.5 lakh into the PPF account is currently not accepted by the PPF system. However, transferring money online to a PPF account is allowed. Some cases have been reported where banks discourage PPF account holders from depositing money into PPF account even though the amount may go up to Rs 50,000.

PPF loan facility

You can take out a loan against deposits in the PPF account.

On loan against PPF, the interest rate is 1%. However, the PPF account does not earn any interest until the loan is repaid. Experts suggest that you should go for a loan against PPF if a small amount is required for a short period of time.

The amount of the loan against PPF surety cannot be greater than 25% of the amount available in the account at the end of the second year immediately preceding the year in which the loan is applied.

The loan against PPF must be repaid within three years of the sanction.

You can use the 4th to 6th year credit facility on the amount credited to the account between the third year and the fifth year.

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Stephen V. Lee