PPF Update: Public Provident Fund is one of the very few investment options that enjoy the benefits of the government’s triple tax exemption, also known as exempt-exempt-exempt (EEE) status. Under this, the beneficiaries get tax exemption thrice, i.e. at the time of investment, accrual and withdrawal. Under the EEE rules, PPF account holders get income tax exemption of up to Rs 1.5 lakh annually. Under Section 80C of the Income Tax Act, 1961, the rate of interest earned every year is also free from any levy and one can withdraw the maturity amount without tax. However, it should also be noted that a person cannot open more than one PPF account and also cannot invest more than Rs 1.5 lakh in that account in a particular year.
The Institute of Chartered Accountants of India or ICAI has sent recommendations regarding the Public Provident Fund Scheme in its pre-budget memorandum. Under this, ICAI has said that the maximum annual limit of PPF deposit should be increased. They have demanded that the deposit limit should be increased to Rs 3 lakh. The apex organization said that there has been no change in the existing limit of Rs 1.5 lakh for depositing money in PPF accounts for many years.
How to double your PPF investment annually?
Until the government considers this change, there is actually a way to double your PPF income. A married man can double his investment by opening a PPF account in the name of his wife thus investing Rs 3 lakh per annum instead of Rs 1.5 lakh. However, as per the rules, the total income tax exemption under section 80C will be Rs 1.5 lakh per annum.
In this case the source of investment will be with the husband if he opens a PPF account in the name of his wife. This means that the interest earned in this account will be clubbed with the income of the husband. Since the interest earned in the PPF account is tax free, the same would be true in both the cases.
If you wish to merge your PPF accounts and have not exceeded the annual limit, you have the option to maintain the PPF account of your choice. If both the accounts are in the same operating agency, the transfer process becomes easier.
Such an investment is suitable for those people who have low risk appetite but want to invest. Risk assets are generally market linked investment instruments such as mutual funds, stocks, NPS, etc.
PPF is the only safe and tax-efficient savings scheme made available to self-employed individuals as well as salaried individuals. It has an interest rate of 7.1 percent, which comes just behind the government’s EPF and Sukanya Samriddhi Yojana schemes.
Public Provident Fund or PPF is one of the most popular, long-term investment options in India. It is a retirement savings policy provided by the Government of India to create long-term wealth for the investors after retirement. Introduced in 1968 by the National Savings Institute of the Ministry of Finance, PPF has become a powerful tool for Indians in which they can enjoy tax benefits. The scheme has emerged as one of the most sought-after investment options owing to its safety, returns and tax benefits.
This government-backed scheme is a variant of a small savings policy and it ensures to provide assured returns at the time of maturity, which makes it so loved among investors.
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