PPF: Good news for PPF account holders. Investing in the Public Provident Fund (PPF) is a smart choice for earning good interest while saving on taxes. It’s a popular scheme among many Indians, backed by a government guarantee. One of the standout features of this investment is that it falls under the EEE category, meaning your contributions, the interest earned, and the maturity amount are all tax-free. You can claim a tax deduction for investments up to Rs 1.5 lakh each year in PPF. However, you can choose to invest more and potentially benefit from double interest. Let’s break it down.

How can you double your investment in PPF?

If you opt for the old tax regime, you can enjoy a tax exemption on investments up to Rs 1.5 lakh under Section 80C of the Income Tax Act. The maximum you can invest in a Public Provident Fund account is Rs 1.5 lakh, and you can make deposits up to 12 times a year. Here’s a handy tip for married investors: if you open a PPF account in your spouse’s name, you can effectively double your investment for the financial year and earn interest on both accounts.

Experts suggest that by setting up a PPF account for your partner, you can shift your investments from other options to PPF. This way, you have two accounts to manage. You can deposit Rs 1.5 lakh in your own account and another Rs 1.5 lakh in your partner’s account within the same financial year. Each account will earn interest separately, and you can claim a tax exemption on one of them, allowing your total PPF investment limit to reach Rs 3 lakh. Since it’s under the EEE category, you’ll also enjoy tax benefits on the interest and maturity amount.

It’s worth noting that under Section 64 of the Income Tax Act, any gifts or amounts given to your spouse are typically added to your income. However, with PPF being completely tax-free due to its EEE status, these clubbing provisions don’t apply.

 

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