People invest in many post office schemes, because it is an investment in which the rescue is low and the benefit of returns is also available. Apart from this, tax exemption can also be claimed under this scheme. Public Provident Fund (PPF) is one of one such scheme. This is a trusted investment for those who are looking for low -rising tax free investment returns.
Public Provident Fund (PPF) offers 7.1% annual tax free interest, PPF has been considered a great option for individuals with high tax brackets. At the same time, many people also invest money in FD. In such a situation, if you are also confused about PPF and FD, then let us know which better scheme can be for you.
How is PPF better for taxpayers?
The tax free position of PPF is particularly beneficial for top taxpayers. Because only by investing in this scheme can you be out of the bracket of 30 percent. If you have invested under this scheme and you are coming in 30 percent tax bracket by a margin of 1.5 lakh, then this scheme can be removed from there.
If you compare with FD, according to a calculation, 7% returns fixed deposits (FD) 30% tax will give a net tax-west of only 4.9% in tax bracket, while PPF will get 10.14% returns. Therefore, even if there is more income, this scheme can give you great benefits.
Invest in PPF strategically
Despite its benefits, investors should be prudent to allocate their contribution to PPF as part of the tax saving strategy. Under Section 80C, an annual contribution limit of Rs 1.5 lakh should be considered with other eligible cuttings like insurance premium and home loan principal repayment. This ensures the use of tax benefits without unnecessary repetition. Taxpayers can maximize their savings by maintaining the portfolio variety, by balanced in various means, by balanced in various means.
15 years lock in period
PPF is a government -backed scheme, it encourages disciplined savings with a deducted contribution under section 80C. It claims EEE (exemption-scam) status, which means that contribution, earned interest and maturity income are all tax free. Although it has a 15-year lock-in period, partial withdrawal is allowed after the seventh year for specific requirements, which adds a layer of flexibility. This scheme is currently giving interest of 7.1 percent, but it can make a millionaire in the long term.