How ₹1.5 Lakh Annual PPF Investment Can Help You Earn ₹75,000 Monthly—Tax-Free and Risk-Free

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The Public Provident Fund (PPF) continues to be one of India’s most reliable and tax-efficient investment tools for long-term wealth creation. While it may not deliver overnight riches, experts highlight that consistent investing in a PPF account over several decades can unlock substantial tax-free income during retirement. With disciplined annual contributions of ₹1.5 lakh and strategic account extensions, one can potentially earn over ₹75,000 a month without tax liabilities after 28 years.


Why PPF Stands Out Among Savings Schemes

PPF enjoys a rare Exempt-Exempt-Exempt (EEE) tax status. That means investments up to ₹1.5 lakh annually are deductible under Section 80C of the Income Tax Act, the interest earned is tax-free, and the entire maturity amount is exempt from taxation. The current PPF interest rate stands at 7.1% annually, making it attractive compared to other risk-free instruments.

The standard tenure of a PPF account is 15 years, but it can be extended in blocks of 5 years indefinitely. This flexibility becomes the foundation for building a retirement corpus that generates a sustainable monthly income.


Building a ₹75,000 Monthly Income: Step-by-Step Calculation

To achieve a consistent monthly income of ₹75,000 from PPF, one must begin early and follow a 28-year investment cycle. Here’s how the numbers stack up, assuming a steady annual investment of ₹1.5 lakh and no change in the current interest rate of 7.1%:

After 15 Years

  • Total investment: ₹22.5 lakh



  • Estimated interest earned: ₹18.18 lakh


  • Total corpus: ₹40.68 lakh
    This is the first milestone. From this point, the investor must opt for an extension and continue investing.


  • After 20 Years

    • Total investment: ₹30 lakh


    • Estimated interest: ₹36.58 lakh



  • Corpus: ₹66.58 lakh
    The extended 5-year period almost doubles the interest component compared to the first 15 years.


  • After 25 Years

    • Total investment: ₹37.5 lakh


    • Estimated interest: ₹65.58 lakh


    • Corpus: ₹1.03 crore
      At this point, the investor has crossed the ₹1 crore mark. Continuing just three more years further boosts the income potential.


    After 28 Years

    • Total investment: ₹42 lakh



  • Estimated interest: ₹89.80 lakh


  • Corpus: ₹1.31 crore
    This corpus can now be used to generate interest-only income without touching the principal.


  • Interest-Only Income Strategy Post 28 Years

    Once the corpus reaches around ₹1.31 crore, the account holder can switch to interest withdrawal mode during the extension blocks. According to current EPFO norms, annual withdrawals of interest are permitted. At 7.1% annual interest, this corpus can yield approximately ₹10.98 lakh per year, which translates to around ₹77,982 per month—completely tax-free.

    Why This Strategy Works Best for Long-Term Planners

    Financial experts suggest that the real strength of PPF lies in its compounding nature combined with tax benefits. Since there is no market risk involved, it remains ideal for conservative investors with a long-term horizon.

    Moreover, the ability to extend the account without resetting it means the investor can keep earning on the already compounded interest, multiplying their returns in later years. This passive, interest-based income can serve as a non-taxable pension during retirement.


    Key Considerations Before Committing

    While the idea of earning over ₹75,000 per month tax-free is appealing, it does require patience and consistency. Investors must ensure timely annual contributions and avoid premature withdrawals, which can interrupt the compounding process.

    Additionally, this plan works best when started in early working years, preferably in one’s 20s or early 30s. Starting late would require additional financial strategies or higher-risk investments to reach the same target.

    A disciplined annual investment of ₹1.5 lakh in PPF, combined with smart extensions, can gradually build a corpus exceeding ₹1.3 crore over 28 years. This not only offers financial security but also a tax-free income stream equivalent to ₹75,000 or more per month.

    Disclaimer: This article is intended for informational purposes only. Calculations are based on current PPF interest rates and may vary in the future. Please consult a certified financial advisor for personalised financial planning and guidance.