What returns will you get by depositing ₹1,000, ₹5,000, or ₹10,000 in PPF? Here is the calculation..

When it comes to earning excellent returns without any risk, the Public Provident Fund (PPF) is the first option that comes to mind. Backed by a government guarantee, this scheme is safe and offers significant tax benefits. If you aspire to build a substantial corpus, PPF can prove to be an excellent vehicle for doing so. Currently, PPF offers an interest rate of 7.1%. Let us understand how a large fund can be created through small investments.

**Building a Large Fund with Small Investments**
The best aspect of investing in PPF is that you can start with a very small amount. If an individual deposits just ₹1,000 per month, their total investment over 15 years would amount to ₹1.80 lakh. At an interest rate of 7.1%, they would earn ₹1.45 lakh in interest, resulting in a total fund of ₹3.25 lakh after 15 years.

Similarly, if you invest ₹5,000 per month, your total deposit over 15 years would be ₹9 lakh. This would earn approximately ₹7.27 lakh in interest, giving you a maturity amount of ₹16.27 lakh. If the monthly investment is increased to ₹10,000, you would invest ₹18 lakh over 15 years. With an interest accumulation of ₹14.55 lakh, you would build a substantial corpus of ₹32.55 lakh after 15 years.

**Key Rules of the Scheme**
The maturity period for a PPF account is 15 years. If you do not wish to withdraw the funds after 15 years, you can extend the account in blocks of 5 years. Under this scheme, you can deposit a minimum of ₹500 and a maximum of ₹1.5 lakh in a financial year. You can make deposits up to a maximum of 12 times a year. The government reviews the interest rates for small savings schemes every quarter. Currently, the interest rate on PPF has been fixed at 7.1% for the July-September 2026 quarter. However, these rates are subject to change in the future; therefore, one should not expect the interest rate to remain constant over the 15-year tenure.

Investing in PPF offers several benefits, including tax exemptions. Under Section 80C of the Income Tax Act, investments up to ₹1.5 lakh qualify for a tax deduction. Additionally, the interest earned on the account is entirely tax-free, and the maturity proceeds are also exempt from tax. If you require funds during the tenure, the scheme's rules allow for partial withdrawals. Furthermore, the facility to avail of a loan against the PPF account is also available.

Small savings schemes are highly effective in ensuring long-term financial security. Before investing, it is important to thoroughly understand all the rules of the scheme. In case of any confusion, consulting a certified financial advisor is a prudent step.

Disclaimer: This content has been sourced and edited from TV9. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.