PPF Tax Benefits & Exemption 2022 – The Public Provident Fund (PPF) is a popular choice for tax-advantaged investing options. This article focuses on the significant tax benefits of PPF as a saving instrument. Know PPF Account meaning in detail.
Do You know? Rs 1.5 lakh investment per year is totally tax free. You can claim this PPF Tax exemption under section 80C. Read how to invest in PPF Account online.
PPF Tax Benefits 2022
There are a number of Tax benefits in PPF Account along with PPF Tax exemptions. Some of them, are explained below.
Exemption from three types of taxes
PPF is one of the rare investment products with triple tax exemptions, known as exempt-exempt-exempt (EEE) classification. This means that you are exempt from paying taxes at the time of investment, accrual, and withdrawal.
The interest that is earned every year is also tax-free. Finally, the accumulated corpus is tax-free when you withdraw it at maturity, making it a tax-free income.
Floating Rates are advantageous for high returns
In fixed deposits, where the interest rate is fixed for the entire duration of the investment.
One of the numerous reasons the PPF outperforms products like the 5-year tax-saving bank FD is this:
The PPF interest rate is variable and can change every quarter. When the economy’s overall interest rate rises, so will the interest rate on PPFs, and your investment will begin to yield higher returns.
Best investment tool for investors
PPF is one of the finest solutions if you are a conservative investor searching for tax savings as well as a guaranteed return and the safety of your money. When most large banks are currently offering 5.5 per cent or lower interest rates on their 5-year tax-saving FDs, the interest rate offered on PPF is unquestionably attractive.
PPF Tax Exemptions 2022
We have provided a comprehensive on PPF Tax saving for better understanding of the PPF deduction in Income tax:
Suppose, Jenny’s annual income is Rs 6 lakh. Here is the PPF Tax exemptions 2022 example:
|Particular||With PPF||Without PPF|
|Total Income||Rs 6 lakh||Rs 6 lakh|
|Exempted income||Rs 2.5 lakh||Rs 2.5 lakh|
|Standard deduction (Rs.)||Rs 50,000||Rs 50,000|
|PPF Tax Exemption under section 80C||Rs 1.5 lakh||–|
|Taxable income||6-2.5-1.5-.5 = Rs 1.5 lakh||6-2.5-.5 = Rs 3 lakh|
|Income Tax as per Old Regime (5%)||7500||5% of 2.5 lakh and 20% of 50000|
= 12500 + 10000
= Rs 22500
So, here, you can save Around 15000 rupees of Tax by investing Rs 1.5 lakh, as per PPF Tax rule 2022.
FAQs Related to PPF Tax Exemptions 2022
How Can I Claim PPF Tax Deduction?
To claim PPF investments as deductions under Section 80C, you must submit the details of your PPF investments for the previous year in your income tax returns. There is a place for exemptions under 80C, where you can enter the amount you invested and any supporting papers to claim deductions.
What is the tax limit of PPF?
Section 80C of the Income-tax Act, 1961 allows for a deduction of up to Rs 1.5 lakh on investments made in each financial year.
Is The PPF Maturity amount Tax-Free?
Yes, the amount received from a PPF upon maturity is tax-free. Any investment placed into a PPF account is tax-free under Section 80C of the Income Tax Act, 1961.
Is PPF good for Tax Saving?
Most investors in the highest tax bracket may not need the section 80C advantage since they have alternative options, such as EPF, children’s education fees, home loan interest, term insurance premiums, and so on. PPF, on the other hand, is a significantly more enticing alternative because of its tax-free nature, especially when any income is taxed at a rate of 30% or higher. PFF allows investors to establish a tax-free investment portfolio.