PPF Tax Saving: Public Provident Fund ie PPF is a very old and reliable way of investment, it not only gives good returns but also helps in saving tax. This is an investment falling in the EEE category, that is, there is no tax on investment, interest and maturity amount. Tax exemption is available on investment in PPF up to Rs 1.5 lakh annually.
This is how the investment limit in PPF is doubled
Investors in PPF not only get assured returns, but also get income tax exemption under section 80C of Income Tax on investments up to Rs 1.5 lakh. But many times it happens that even after the limit of PPF investment is over, the investor is left with money and he is looking for investment options. According to tax experts, if the investor is married, then he can open a PPF account in the name of his wife or husband and invest Rs 1.5 lakh separately in it.
These benefits are available on investment in PPF
According to experts, opening a PPF account in the name of one’s life partner will double the limit of PPF investment of the investor, although even then the income tax exemption limit will still be Rs 1.5 lakh. Even if you get 1.5 lakh income tax exemption, but it has many other benefits. PPF investment limit doubles to Rs 3 lakh. Being in the EEE category, the investor gets tax exemption on the interest and maturity amount of PPF.
Clubbing provisions not in effect
Income from any sum or gift given by you to wife will be added to your income under section 64 of Income Tax. However, in case of PPF which is completely tax free on account of EEE, the clubbing provisions have no effect.
trick for married people
At the same time, when your partner’s PPF account matures in future, then the income from your initial investment in your partner’s PPF account will be added to your income year after year. Therefore, this option also gives married people a chance to double their contribution in the PPF account.
It is said to be a better option for those people, who want to take less risk and do not want to make market linked investments like NPS, Mutual Funds, where the risk appetite is high. Let us tell you that the interest rate of PPF has been fixed at 7.1% for the July-September quarter.