Dear Team,
I have a query on PPF. Say I invest 1,50,000/- for the year 2014-15 (from April 2014 to March 2015). I invest the same amount for the next financial year; i.e., 2015-16, and so on till 15 years or so.
How will the tax be calculated on this total amount?
| Originally posted by : Ram | ||
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Dear Team, I have a query on PPF. Say I invest 1,50,000/- for the year 2014-15 (from April 2014 to March 2015). I invest the same amount for the next financial year; i.e., 2015-16, and so on till 15 years or so. How will the tax be calculated on this total amount? |
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- The PPF is a highly tax-efficient instrument.
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- PPF interest is exempted from tax u/s 10(11) of the Income-tax Act, 1961.
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- The entire amount of investment is eligible for deduction u/s 80C of the IT Act.
(Sec. 80C deduction limit has been raised to Rs. 1,50,000/- w.e.f. AY 2015-16 by the Finance Act, 2014.)
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- Amount received on maturity is not liable to tax and the investment in a PPF account does not qualify as an asset under the wealth tax provisions and, thus, also exempted from the wealth tax.
What you deposit in PPF each year is deductible from gross income u/s 80C. And what you receive as maturity amount after 15 years is totally exempt u/s 10. At least for now. Not sure how long the Govt will keep the maturity amount exempt. You may even extend for every 5 year blocks after 15 years. Ideal for retirement corpus.
CAclubindia
