When a person open a PPF account so he/she has the first question come in his/her mind what is the Tax Benefits in Public Provident Funds (PPF). Tax Saving is one of the key factors while choosing any investment scheme in India. When it comes to investment for tax saving, PPF certainly tops the list of options, simply because it offers a number of benefits along with exemption from income tax. For that matter, PPF offers a handsome interest rate of 8.7% for the current finacial year.
Tax Benefits in Public Provident Funds (PPF)
Any contribution made by an account holder towards PPF account is completely free from taxation. So that at the point of Tax Benefits in Public Provident Funds (PPF) is the best scheme. That means the amount invested towards the account, the interest he/she receives per year on the investment and the maturity amount after the term ends, are all exempted from Income Tax under Section 80C.
It is important to mention here that the minimum contribution that one can make towards his/her account is Rs 500 per year and the maximum amount that can be invested in PPF amount is Rs 1.5 lakh. This way, the maximum deduction that you can get from PPF investment is Rs 1.5 and not more than that.
This is a remarkable amount for those engaged in middle income jobs and business. If they can save taxes on Rs 1.5 lakh, it is certainly good news for them. However, those engaged in multi crore businesses or getting higher salary may not really be attracted to PPF investment.
PPF is definitely a good option for people who want to secure their future with regular savings. The account can be opened for anyone between the ages of 18 years to 60 years. The earlier you start your investment, the better it is for your future. You can also read here about Public Provident Fund PPF FAQ
Since, you can have just one PPF account under your name, one good practice that most of the tax savers do is get a PPF account for themselves and open a PPF account in the name of either their child or their dependent. This way, they can claim the exempted for double the amount.
It is noteworthy to mention here that you can claim for the PPF investment that you do in the account of your children (minor), You can read this article PPF (Public Provident Funds) for Minors owever you can’t claim your contributions towards the PPF accounts of your siblings or parents.
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