Our honorable finance minister in budget 2014 has hiked the maximum ceiling limit of Public Provident Fund scheme or PPF from last year figure of Rs. 1 lakh to Rs. 1.5 lakh.
Now with a notification, government of India has changed the maximum ceiling limit of Public Provident fund Act, 1968 to increase the maximum investment limit to Rs. 1.5 lakh for the financial year 2014-2015.
In this article, we will be discussing the impact of hike in investment limit of Public Provident Fund and its tax benefits.
Tax benefits on PPF investment extended
Earlier to this change, maximum investment limit for Public Provident Fund scheme was Rs. 1 lakh. Many small investor uses to take this benefit of investing in PPF for higher return and at the same time they were getting tax deduction under section 80C.
Now with the change in budget 2014, a person having PPF account in a post office or bank can increase his investment limit to get higher return from government. With this in view, budget 2014 has also amended section 80C’s investment limit to increase the maximum ceiling limit of tax deduction to Rs.150000.
As PPF is one of the eligible investment option mentioned in the investment list of section 80C, a person who has invested Rs. 150000 in PPF can now take benefit of section 80C deduction for his entire investments.
With this change, a small investor can now invest another 50000 rupees in addition to last year limit of Rs. 100000 in public provident fund scheme to get good returns for long term benefits in addition to tax deductions of section 80C.
Please remember interest on PPF and withdrawal from PPF account is also not taxable in India.
We encourage small investors to invest in PPF account to accomplish long term goals like children’s marriage or higher education.