For many people in India, retirement planning isn't about earning high returns, but rather about creating a secure, tax-free income stream. Therefore, the Public Provident Fund (PPF) is a unique option. If you invest with discipline and for the long term, you can earn returns of approximately ₹1 crore, while receiving a monthly pension of ₹61,500.

PPF has become one of the most popular long-term savings schemes in India over the past several decades. This scheme is government-backed and is one of the safest investment options. Investors in this scheme are eligible for tax deductions under Section 80C (under the old tax system). PPF is tax-free upon maturity. Currently, the annual interest rate on PPAs is 7.1%. Furthermore, the government fixes and revises the rates every three months.

Nevertheless, PPF has consistently delivered superior returns compared to other fixed income products. Over the past few years, PPF rates have declined compared to its inception. Nevertheless, it offers an interest rate of 7.1% on investments. Tax-free – it remains attractive for conservative investors.

PPF rules

Minimum investment: Rs 500 per year

Maximum investment: Rs 1.5 lakh per year

Lock-in period: 15 years

Extension: Permanently in 5-year blocks

If you wish to continue investing after completing 15 years, you must submit Form H one year before the end of the term. Interest on PPF is calculated monthly (on the lowest balance after the 5th of every month), compounded annually, and credited at the end of the financial year.

How to raise Rs 1 crore in PPF?

The maximum investment in this scheme is ₹1.5 lakh, assuming you invest the entire amount every year at an interest rate of 7.1%.

Annual Investment – ​​Rs 1.5 lakh

Interest rate – 7.1%

Investment period: More than 15 years

Corpus Growth

15 years: Rs 40.68 lakh

20 years (if extended by 5 years): Rs 66.58 lakh

25 years (if extended by another 5 years): Rs 1.04 crore

So to reach Rs 1 crore, you will have to invest for 25 years—that is, 10 years after the initial 15-year maturity.

Monthly pension of Rs 61,500

Now suppose after 25 years you stop paying installments and invest only in PPF.

Total Funds: Rs 1.04 crore

Estimated interest rate: 7.1%

Annual interest:

7.1% of Rs 1.04 crore = Rs 7.38 lakh per year

Monthly interest income: Rs 7.38 lakh ÷ 12 = Rs 61,533 per month

This amount can be considered as monthly pension, while your principal amount remains the same at Rs 1.04 crore.

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