It is not for any small reason that Public Provident Fund (PPF) has gained so much appreciation amongst investors. Compared to many of the other tax-saving investment options, PPF is considered a topper in terms of both, safety and returns. Here are some of the advantages in its favour:
Triple Exemption Status
PPF enjoys the benefit of triple tax exemptions i.e. the exempt-exempt-exempt (EEE) status. This means that you get tax exemption at the time of investment, accrual and withdrawal. One can avail deduction of up to ₹1.5 lakhs on investment made in each financial year under Section 80C of the Income Tax Act, 1961. Moreover, the interest earned on the investment is also exempt from taxation. Even the accumulated corpus which you withdraw on maturity is tax-exempt, thus making it a totally tax-free income.
Respectable Post-Tax Rate of Return
PPF, unlike Employees Provident Fund (EPF), is open to those not eligible for EPF. The interest rate on PPF as on March 2022 was 7.1 per cent, which is higher than other small savings schemes like the National Savings Certificate (NSC) that offers 6.8 per cent or the India Post Office's five-year time deposit that offers 6.7 per cent. Moreover, the other saving schemes don't offer EEE status and hence their interest rates are pre-tax.
Beneficial Floating Rates
Esta historia es de la edición May 23, 2022 de Dalal Street Investment Journal.
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Esta historia es de la edición May 23, 2022 de Dalal Street Investment Journal.
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