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PPF Account: Want to Get More Return from your PPF Investment? Follow this Rule

PPF Update: The Public Provident Fund is one of the very few investment options that enjoy the perks of the government’s triple tax exemptions, also known as the exempt-exempt-exempt (EEE) status. Under this, beneficiaries get tax exemptions thrice, that is, during the time of investment, accrual, and withdrawal. PPF account holders, under the EEE rule, get income tax exemptions of up to Rs 1.5 lakh per annum. Under Section 80C of the Income-tax Act, 1961, the interest rate earned each year is also exempt from any levy and one can also withdraw the matured amount without being taxed. However, one should also note that one individual cannot open more than one PPF account and also cannot invest more than Rs 1.5 lakh in that account in a particular year.

The Institute of Chartered Accountants of India, or ICAI, has in its pre budget memorandum sent recommendations regarding the Public Provident Fund scheme. Under this, the ICAI has said that the maximum annual limit for PPF deposits should be increased. They have demanded that the deposit limit must be increased to Rs 3 lakh. The top organisation said that the present limit of Rs 1.5 lakh to deposit money in the PPF accounts has not been changed for several years.

How to Double Your PPF Investment Yearly?

Till the change gets considered by the government, there is indeed a way to double your PPF income. A married man can double his investment by opening a PPF account in the name of his wife, and thereby invest Rs 3 lakh per annum instead of Rs 1.5 lakh. However, the overall income tax exemption under Section 80c will be capped at Rs 1.5 lakh per annum, according to the rules.

The source of the investment would in this case be with the husband if he opens a PPF account with his wife’s name. This means that the interest earned in this account will get clubbed with husband’s income. Since the interest earned in PPF account is tax exempted, this will hold true in both the cases.

In case you want to merge your PPF accounts and have not exceeded the annual limit,  have an option to retain the PPF account of your choice. If both the accounts are held in the same operating agency, the transfer process becomes easier.

Such an investment is advisable for those who have low risk appetite but wants to make an investment. Risk assets are typically market-linked investment tools like mutual funds, stocks, NPS, etc.

PPF is the only safe and tax-efficient savings scheme which is made available to self-employed persons as well as salaried individuals. It has an interest rate of 7.1 per cent, which comes just behind EPF and Sukanya Samriddhi Yojana schemes of the government.

The 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 Indian government to create long term wealth for investors post retirement. Introduced in 1968 by the Ministry of Finance’s National Savings Institute, PPF has become a powerful tool for Indians wherein they can enjoy tax benefits. The scheme has emerged as one of the most sought-after investment options due to the safety, returns and tax benefits it offers.

This government-backed scheme is a form of a small savings policy and ensures to provide assured returns at the time of its maturity, which makes it so loved among investors.

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