Start, maintain PPF account even in new tax regime

The government expects investments in small savings instruments, especially Public Provident Fund (PPF), to plummet sharply in 2024-25 with over 70 per cent of taxpayers gravitating to the new tax regime, where they will not be eligible for the Section 80C tax deduction.

- BINDISHA SARANG & SANJAY KUMAR SINGH

Should investors opting for the new tax regime invest in PPF, purely for its merits as an investment product? High, tax-free return PPF remains attractive even without the Section 80 C deduction.

"The tax-free return of 7.1 per cent is very attractive. While the Employees Provident Fund (EPF) offers a higher return of 8.25 per cent which is tax-free for contributions up to 2.5 lakh, it terminates upon retirement. PPF can be extended for life," says Deepesh Raghaw, a Sebi registered investment advisor (RIA).

Since PPF is a government-based scheme, it offers full capital protection and guaranteed, risk-free return.

"PPF carries minimal risk. Its fixed-income nature allows investors to diversify their portfolios," says Jinal Mehta, founder, Beyond Learning Finance.

PPF becomes flexible after the initial 15-year maturity period ends. It can be extended in blocks of five years. Extensions can happen without or with contribution.