If you want to save a lot of money for your child’s future through long term investment, then the PPF scheme of the post office can prove to be a better option for you. By depositing Rs 1,000 every month, you can add more than Rs 8 lakh. Whenever it comes to investing in a government scheme, the name of Public Provident Fund (PPF) definitely comes up.
This is one of the popular schemes of the post office. You can invest a minimum of Rs 500 and a maximum of Rs 1.5 lakh. The PPF scheme matures in 15 years. Along with this, tax benefits are also available in it. Currently, this scheme is giving interest at the rate of 7.1 percent. If you keep depositing even Rs 1000 in the name of your child in this scheme every month, then you can add more than Rs 8 lakh for him. Understand through calculation what you have to do for this.
More than 8 lakhs will be added like this
The scheme will mature after 15 years, but you have to extend it twice in blocks of 5 years each and continue the investment for 25 years continuously. If you invest Rs 1,000 every month in this scheme, you will invest Rs 12,000 in a year. If you invest Rs 1,000 every month for 25 years, you will invest a total of Rs 3,00,000. But at the rate of 7.1 percent interest, you will get Rs 5,24,641 only from interest and your maturity amount will be Rs 8,24,641.
This is how extension will happen with contribution
PPF account extension is done in blocks of 5 years each. In case of PPF extension, the investor has two options – first, account extension with contribution and second, account extension without investment. You have to get extension with contribution. The form will be submitted in the same post office/bank branch where the PPF account has been opened. For this, you will have to submit an application to the bank or post office where the account is.
Keep in mind that you will have to submit this application before the completion of 1 year from the date of maturity and a form will have to be filled for extension. If you are unable to submit this form on time, then you will not be able to contribute to the account.
There will be tax savings in three ways
EEE means Exempt Exempt Exempt. In the schemes falling in this category, there is no tax on the amount deposited annually, apart from this, there is no tax on the interest earned every year and the entire amount received at the time of maturity is also tax free, that is, there is tax saving in all three – investment, interest/return and maturity. PPF is an EEE category scheme, so you will get tax exemption in three ways in this scheme.
