Tax Saving Scheme: Investing Rs 12,500 every month will create a fund of Rs 40,00000 in 15 years – Know how

Tax deduction can be claimed on investment in Public Provident Fund (PPF). However, it must be kept in mind that only taxpayers using the old regime of income tax can claim this deduction

The government has not changed the interest rate of small savings schemes. This means that the interest on all small savings schemes will remain unchanged in the second quarter of this financial year. These include PPF, Sukanya Samriddhi Yojana, Kisan Vikas Patra and Post Office Savings Deposit Schemes. The interest rate on PPF will remain at 7.1 percent. This is the most popular investment option in small savings schemes.

Benefit of deduction on investment of Rs 12,500 every month

Tax deduction can be claimed on investment in Public Provident Fund (PPF). However, it must be kept in mind that only taxpayers using the old regime of income tax can claim this deduction. Deduction can be claimed by investing up to Rs 1.5 lakh in PPF in a financial year. This means, if a person invests Rs 12,500 every month in PPF, he can claim deduction on his total investment in a financial year.

PPF is an investment scheme with EEE tax benefit

An investment of Rs 12,500 every month in PPF creates a fund of Rs 40.6 lakh in 15 years. A major feature of PPF is that it comes under EEE tax-benefit investment options. This means that there is no tax on your contribution amount. There is no tax on the interest amount of your deposit and finally there is no tax on your maturity amount either.

There is no fear of money sinking as it is a government scheme

For those people who want fixed returns on investment, PPF is the best investment option. Due to its attractive interest rate, many people include PPF in retirement planning. Since this small savings scheme gets the support of the government, investing in it is considered safe. There is no fear of your hard-earned money sinking in it.

Investment matures in 15 years

Financial advisors say that it is wise to include PPF in retirement planning. This is because the returns of mutual fund equity schemes are affected by the fluctuations in the stock markets. But, your investment in PPF is not affected by the fluctuations in the stock market. Investors only have to keep in mind that PPF money matures in 15 years.

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