The Public Provident Fund (PPF) has long been a reliable option for long-term investment and retirement planning. This scheme helps investors build a substantial corpus within 15 years. PPF offers tax deductions under Section 80C of the Income Tax Act. However, this benefit is only available under the old Income Tax Regime. Therefore, the question arises whether taxpayers using the new tax regime should also invest in PPF.
Investment experts believe that even though the new tax system does not allow deductions under Section 80C, PPF remains an attractive investment due to its unique features. It helps build a safe corpus over 15 years for major expenses such as your children’s higher education or marriage.
Market Risk-Free and Guaranteed Returns
PPF is particularly attractive to risk-averse investors. PPF returns are not affected by stock market fluctuations. Since it is a government scheme, your money is completely safe.
Investors have a clear estimate of how much they will receive after 15 years if they deposit a fixed amount every year. The government reviews the PPF interest rate quarterly or annually. Currently, PPF offers an interest rate of 7.1% per annum, which is credited to the investor’s account on March 31st every year.
PPF’s biggest strength is its EEE tax rules
PPF’s attractiveness is further enhanced by its tax rules. PPF is classified under the EEE category:
E (Exempt): Your investment is tax-free (in the old tax system).
E (Exempt): Interest earned each year is tax-free.
E (Exempt): The maturity amount received after 15 years is also tax-free.
Even in the new tax system, this scheme is highly profitable as an EEE product. Being government-guaranteed, it is a powerful option for investors who want complete security for their money.
How a large fund is created in 15 years
The advantage of long-term investment in PPF is the ability to build a large fund. For example, if you invest ₹60,000 annually (i.e., ₹5,000 every month) in this scheme, you will have a corpus of approximately ₹16,27,284 after 15 years.
This amount can serve as a very useful capital for your children’s higher education, marriage, or your own retirement. This is why many people make PPF an integral part of their retirement planning to diversify risk, even if they choose the new tax system.
