Union Budget 2021-22 Predictions: 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. He has demanded that in view of the current situation, the deposit limit should be increased to Rs. The ICAI’s recommendation on the increase in the PPF budget limit comes weeks before the budget session begins in Parliament. The session is scheduled to begin from February 1 this year and a range of issues are expected to be discussed. Union Finance Minister Nirmala Sitharaman will present the annual budget in Parliament on this day.
As per reports, the premier institute had recommended before the Union Budget 2022-23. It said the increase in the deposit limit of PPF is significant as it is the only safe and tax-efficient savings scheme made available to self-employed individuals as well as salaried individuals. ICAI also said that it believes that the increase in PPF deposit limit will boost household savings as a percentage of GDP. The premier organization said it would have an anti-inflationary effect.
“While the assessees in employment are compelled to save 12 per cent of their salary (with equal contribution from the employers), the only safe and tax-efficient option available to the self-employed assessees is PPF. Hence, the suggestion to increase the PPF contribution limit to Rs 3 lakh,” said ICAI, as reported by Financial Express.
“It could also boost household savings as a percentage of GDP and would have an anti-inflationary effect,” the report quoted ICAI as saying. The institute notes that PPF is used by salaried individuals as well as entrepreneurs as a means of saving.
ICAI said that the existing limit of Rs 1.5 lakh for depositing money in PPF accounts has not been changed for many years. “The revised monetary limit will help in increasing the savings of the individuals and is necessary keeping in view the rate of inflation,” it said.
What are the major suggestions given by ICAI?
Here are the key suggestions sent by ICAI to the Center in the pre-budget memorandum regarding PPF.
a) The annual limit for deposits in PPF account has been increased to Rs 3 lakh from the existing limit of Rs 1.5 lakh.
b) The maximum limit of deduction under section CCF should be increased from Rs 1.5 lakh to Rs 3 lakh.
c) In order to provide savings opportunities to the citizens at large, the ICA suggested that the quantum of deduction under section 80C be increased from Rs 1.5 lakh to Rs 2.5 lakh.
What is PPF?
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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