Let’s take a closer look at how you could get Rs 1,50,000 under Section 80C without making any investments.
Not a day goes by these days without someone bringing up Section 80C and Rs. 1,50,000, does it? You have lunch with colleagues, and someone mentions they recently made an ELSS investment in an attempt to save taxes. Mutual fund agents call you at least once a week, urging you to take full advantage of the higher limit.
However, just pause before you are persuaded that you need to make investments in order to benefit from the increased limit under Section 80C.
We’ll show you how to reach the Rs. 1,50,000 limit without making any investments. In addition to promoting savings plans, Section 80C provides tax exemption on a portion of your costs.
Investing in the Public Provident Fund (PPF) is a popular choice for many retail investors who want to earn a higher rate of interest while also saving income tax. The PPF offers a variety of benefits, including:
- High interest rate: The current interest rate for PPF is 7.1% per annum, which is higher than the interest rates offered by most other small savings schemes.
- Tax benefits: Investments in PPF are eligible for tax deduction under Section 80C of the Income Tax Act. This means that you can claim a deduction of up to ₹1.5 lakh per year on your taxable income.
- Maturity benefits: The PPF matures after 15 years, and you can withdraw the entire amount at maturity. You can also extend the PPF account for another 5 years in blocks of 5 years.
- Loan facility: You can take a loan against your PPF account after the completion of 3 years.
- Security: The PPF is a government-backed scheme, which means that your investment is safe and secure.
Why Invest ₹1.5 Lakh in PPF Before April 5?
The deadline to invest in PPF for the current financial year (2023-24) is April 5, 2024. If you invest the maximum amount of ₹1.5 lakh in PPF before this date, you can maximize your earnings. This is because interest on PPF is calculated on a monthly basis, and the interest rate is compounded annually.
Here are some of the reasons why you should invest ₹1.5 lakh in PPF before April 5:
- Maximize your earnings: By investing the maximum amount in PPF before April 5, you will earn interest for the entire financial year. This will give you a higher return on your investment compared to investing the same amount later in the year.
- Claim tax deduction: You can claim a tax deduction of up to ₹1.5 lakh on your taxable income for the current financial year by investing in PPF before April 5. This will reduce your tax liability and save you money.
- Secure your future: PPF is a long-term investment option that can help you secure your financial future. By investing in PPF, you can build a retirement corpus or save for other long-term goals.
How to Invest in PPF
You can invest in PPF through the following channels:
- Post office: You can open a PPF account at any post office in India.
- Bank: You can also open a PPF account at select banks that offer PPF services.
- Online: Some banks and financial institutions allow you to open a PPF account online.
Is PPF the Right Investment for You?
PPF is a good investment option for individuals who are looking for a safe and secure investment with a high rate of interest. However, it is important to note that PPF is a long-term investment option, and you will not be able to withdraw your money before the maturity period of 15 years.
If you are a low-risk appetite investor, PPF is a good option to consider. However, you should also consider other investment options such as fixed deposits, mutual funds, and bonds before making a decision.
Additional Information
Here are some additional things to keep in mind about PPF:
- The minimum investment amount in PPF is ₹500 per year.
- You can make contributions to your PPF account in lump sum or installments.
- You can withdraw up to 50% of the balance in your PPF account after 7 years.
- You can also take a loan against your PPF account after 3 years.
- The interest rate on PPF is revised every quarter.
Investing in PPF is a good way to save for your future and earn a high rate of interest. If you are looking for a safe and secure investment option, PPF is a good choice to consider. However, you should also consider other investment options before making a decision.
What are the investments eligible for deduction under 80C?
PPF, ELSS, ULIP, Senior Citizens Savings Scheme, Tax Saver FDs, Post Office Term Deposit, NPS, NSC, and Sukanya Samridhi Account
This is a comprehensive list of all the deductions permitted by Section 80C.
How to reach the Rs.1,50,000 limit without investments?
Step 1: Check your Employee PF Contribution during the year. Your cumulative provident fund contributions for the current fiscal year may have added up to a sizable sum. This is covered under the Rs. 1,50,000 limit.
Step 2: Did you purchase a home? Under Section 80C, you can write off stamp duty and registration costs.
Step 3: Are you repaying a mortgage? For information on making an EMI payment, see your home loan interest certificate. You can deduct your principal repayment from your taxes this year.
Step 4: Get your kids’ tuition fee receipts and add them if they attend school or college (this includes playschool and preschool).
Step 5: Claim the premium payments as well. Are you paying your life insurance premiums? The sole requirement is that the premium be less than 2010% of the total amount guaranteed.
Step 6: Total everything and subtract it from Rs. 1. 5 lakh, i. e.
Rs. 1,50,000 – (Steps 1–2, 3–4, 5–6) = Amount still permitted under Section 80C
Step 7: You may find that you have only a small portion of the total limit remaining, say Rs 15,000.
Step 8: You might consider making financial investments in goods that fit your risk tolerance.
It is crucial that you ascertain the extent to which 80C already covers your investment and expenses. After analyzing the aforementioned, additional 80C investments for tax savings should be made. One should only make additional 80C investments if the overall cap is not fully utilized in order to maximize benefits.
Do not miss on PF investments …Tax exempt limit of 2.5 lac & 5 lac explained I Smart Investments
FAQ
Is PF considered under 80C?
Can I deposit more than 1.5 lakh in PPF account?
Is PF taxable in India?
What is the investment limit for PPF?
Is PF included in 1.5 lakh investment?
An employee’s contribution to the Employee Provident Fund (EPF) account also earns a tax break under Section 80C of up to Rs 1.5 lakh. This amounts to 12% of salary that is deducted by an employer and deposited in the EPF or other recognised provident funds.
How much money do you need to invest in a PPF?
If you are unable to put in a huge amount at one go, you put the money in 12 installments, wherein each requires an investment of a minimum Rs 500 monthly. Public Provident Fund taxability, PPF tax benefit under Section 80C: Taxpayers can claim deductions up to Rs 1.5 lakh under Section 80C of the Income Tax Act.
How much tax rebate if income is less than 5 lakh?
Your total income after reducing the deductions under chapter VI-A (Section 80C, 80D and so on) does not exceed Rs 5 lakh in an FY. The tax rebate is limited to Rs 12,500. This means, if your total tax payable is less than Rs 12,500, then you will not have to pay any tax.
What is the maximum deposit limit for PPF?
The maximum limit of Rs 1.5 lakh implies that you cannot claim deduction on full amount when the sum of your total contribution in PPF account and other schemes allowed under Section 80 is more than Rs 1.5 lakh in a financial year. Making the deposit during this time of the month and will let you get the best out of this investment.