Why PPF is the safest way to save tax, these are 5 big reasons

If you are also looking for investment option for tax saving then PPF is the best option for you. The government is currently giving 7.1% interest on PPF. At the same time, if you deposit money in this scheme, then investment is being done and tax is also being saved.

Although there are dozens of schemes in the market for tax saving and investment, yet Public Provident Fund i.e. PPF is still considered the best option. This saves you a good amount of tax. The government is currently giving 7.1% interest on PPF. Despite the decrease in interest rates, PPF has many benefits. If you deposit money in this scheme, investment is being made and tax is also being saved. Let us tell you 5 reasons why PPF is a good option for tax saving.

These are 5 benefits

Both employed and self-employed people can avail its benefits. In this saving scheme, the government guarantees security and returns are also guaranteed. At present the interest on PPF is 7.1 percent.

Public Provident Fund comes in EEE category. By investing in this, one gets the benefit of deduction under section 80C. The interest income and maturity amount on maturity are completely tax free. Talking about other schemes, mutual funds definitely give higher returns, but long term capital gains tax of up to 20 percent is imposed.

If you want to extend this scheme for 25 years, then in the end you will get Rs 25 lakh 8 thousand 284. During this period, a total of Rs 912500 will be deposited from your side and a total of Rs 1595784 will be received as interest. The most important thing is that this amount will be completely tax free.

The maturity of PPF is 15 years. Even after that it can be increased at an interval of 5-5 years. Suppose your age is 35 years. You have decided to invest in PPF for retirement. For tomorrow, you deposit Rs 100 on daily basis, which is a very simple amount. In such a situation, when you turn 60, you will get a total of Rs 25 lakh which will be completely tax free.

Not only is the interest earned on PPF investments tax-free, but PPF also offers other tax benefits under Section 80C of the Income Tax Act. For example, if you invest an amount of ₹1.5 lakh every year in a financial year, you can claim income tax deduction. Although PPF comes with a lot of advantages, the only disadvantage of this scheme is that it has a lock-in period of 15 years which is a very long period in nature. Although it lets you withdraw the amount after 5 years, you will have to pay 1 percent interest from the date of opening the PPF account.