Public Provident Fund rules: PPF income tax benefits, returns and other advantages you should know
Public Provident Fund or PPF has remained a sought after investment scheme for a long time now. The current coronavirus crisis which has smashed stock markets across the world, has further underlined the importance of investing in schemes that guarantee fixed returns.
Public Provident Fund or PPF has remained a sought after investment scheme for a long time now. The current coronavirus crisis which has smashed stock markets across the world, has further underlined the importance of investing in schemes that guarantee fixed returns. The other advantage here is that while the scheme comes with a lock-in period of 15 years, investors have the option to partially withdraw the amount in case of emergency.
Further, it allows an investor to avail the Income Tax exemption up to Rs 1.5 lakh investment as well. This is, of course, if you opt for the old tax regime going forward.
What you should know?
The interest rate on PPF is decided quarterly by the central government and for July to September quarter. PPF account matures after completion of 15 years. One may extend the term after 15 years by a block of another 5 years with or without making additional contributions. The maturity amount of PPF is 100 per cent tax-free. PPF is a 100 per cent Debt oriented product, guaranteed by the government, providing safety of capital.
How much can you invest?
In PPF, an investor can't invest beyond Rs 1.5 lakh. A PPF investor can stop investment after 5 years and can withdraw the whole amount after 15 years.
What are the tax benefits?
Under Section 80C, an income taxpayer can claim tax exemption up to Rs 1.5 lakh per annum investment in PPF. However, this section gives a collective income tax exemption up to Rs 1.5 lakh which includes ELSS Mutual Fund, PPF, Voluntary Provident Fund (VPF) investments as well. So, if investors are puttig in money in other option falling under Section 80C, then they won't be able to claim income tax exemption for his or her investment in PPF.
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