PPF: A combination of Tax Savings, Returns & Safety

Income Tax Tax Savings & Deductions
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"Price is what you pay. Value is what you get, said Warren Buffet.

The key to wealth creation is regular and systematic savings. For a person to begin his investment with risk-free returns and tax savings, PPF is one good option.

What is PPF?

PPF (Public Provident Fund) is a long-term investment vehicle that enables a person to accumulate funds for a later stage along with lowering yearly taxes. The investment needs to be made a minimum of once a year with a minimum investment of ₹500.

Some important features & benefits of PPF:

PPF is a long-term investment of 15 years that offers about a 7.1% interest rate, which is usually higher than the return on FDs provided by banks.

PPF falls in the EEE category. This means the investment, maturity, and interest amount are all tax-free. One can open a PPF account and deposits in this account can be claimed as a deduction u/s 80C up to ₹1,50,000 while filing an income tax return, thereby reducing the tax liability.

Some other features:

  • The lock-in period is 15 years, but it can be further extended to a maximum of 5 years
  • The deposits can be made in cash or cheque
  • PPF account can be opened for a minor as well
  • PPF account cannot be closed before 15 years
  • Loans can be taken on the PPF balance from the 3rd FY from the opening of the PPF account
  • Partial withdrawal can be made after the completion of 5 years from the date of opening the PPF account
  • A PPF account holder can appoint a nominee at any time
  • Opening a PPF account cannot be done in joint names

Who is eligible to open a PPF account?

  • Any Indian citizen can invest in PPF.
  • NRIs & HUFs cannot open a PPF account.

A few FAQs

  1. How can one open a PPF account?

Answer: This can be done online or offline (Post Office)

  1. Can the PPF account be closed before maturity?

Answer: PPF can be closed 5 years after the opening of the account that too under special circumstances.

  1. How many years a PPF account can be extended?

Answer: A PPF account can be extended any number of times (in the blocks of five years ) upon the account’s maturity after 15 years.

Read more about PPF: Features, Eligibility & More information - Learn by Quicko

Have doubts? Comment below!

1 Like
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During FY 2023 – 2024, I have already given a donation of Rs. 20000/- which will give me a deduction of Rs. 10000/- U/S 80G. Based on following details, what will be my likely Income Tax liability and how much additional donation should I give to bring down my tax liability to zero?

  1. Pension ……………………………… 1,03,000/-
  2. Income from house property… 80,400/-
  3. STCG ……………………………………… 65,000/-
  4. LTCG …………………………………… 1,54,000/-
  5. Divedends……………………………. 1,70,000/-
  6. Interest from banks, SGBs etc. 1,58,000/-
  7. Contribution U/S 80C ………… 1,50,000/-
  8. Medical expenses ………………. 12,000/-
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Hi @nayakd1,

You can use Quicko’s income tax calculator to determine your tax liability and plan your taxes.
Income tax calculator

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Thanks. I checked Income Tax Calculator suggested by you but it does not contain LTCG and STCG. How to determine applicable tax slab when LTCG and STCG are taxed at different rates? Should one add LTCG and STCG to all other income for calculating applicable slab as in the example I had given?

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Hi @nayakd1,

You can enter your long-term and short-term gains under ‘capital gains’ while using the calculator.

Capital gains are taxed at a special rate. For calculating the income slab that you fall in, this income is not taken into account.

You need to add all the incomes that are taxed at the slab rate which includes income from salary, business, interest, dividends etc. and identify the applicable tax rate as per the slab.

Your LTCG will be taxed at a flat rate of 10% and STCG at 15%.

Hope this clarifies!