Another important thing that you need to keep is mind is about investing in PPF. At present, PPF investments yield a return of 8 per cent per year. However, it should be noted that the returns are assured but not fixed.
This is because the rate of return is subject to revision i.e. it can be revised upwards or downwards thereby impacting the returns.
Also, apart from Section 80C tax benefits on the amount invested, interest income from PPF investments is exempt from tax under Section 10(11) of the Income Tax Act.
Even though it is not a favoured investment instrument among individuals who are more concerned with the liquidity of their investments because of its tenure running through 15 years, PPF can be an ideal investment in case you are looking to build a corpus for long-term needs like retirement and children’s education.
There is a need for salaried individuals to devote adequate time and effort to tax planning exercise and be aware of the various benefits that they can avail of.
Starting early in terms of researching about the different investment avenues and choosing wisely from the gamut of investments available is very important – else you end up paying higher tax.
Also read: HRA: How is it calculated, and more
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