Saturday, 12 November 2011

PPF investment limit hike & interest hike accepted

The recommendations of increasing annual investment limit of PPF (Public Provident Fund) and interest hike of PPF and other small saving schemes accepted the Government of India. The government has accepted the recommendations of the panel which is helpful to get more return from small saving schemes such as PPF, NSC, Post Office Monthly Income Scheme, Post office Savings Account etc.

The annual investment limit of PPF was Rs. 70000 and now it is increased to Rs. 100000. Now an investor can deposit Rs. 100000 in PPF and can earn tax exemption under section 80C and tax free interest. The Full exemption limit of Rs. 100000 under section 80C now can avail solely with PPF account itself.

The interest rate of PPF is 8% at present and it is increasing to 8.6% which is equals to a gross interest (interest before tax) of 9.59%, 10.83% & 12.45% respectively for 10%, 20% & 30% tax brackets.

If a person invests 100000 in PPF every year and at the maturity after 15 years the investment will be grown up to Rs. 3190110.

The time span of Post office Monthly Income Scheme (MIS) and 6 years NSC is reduced to 5 years.

The interest rate of 5 year National Savings Certificate (NSC) is increasing to 8.4% from the present 8%. NSC is also a tax saving investment under section 80C but the interest on NSC is taxable even if there is no TDS deductible at source.

One of the popular small saving investment scheme named Kissan Vikas Patra is discontinued.

A brand new National Saving Certificate for 10 years is introduced.

All the above mentioned modifications are beneficial to investors

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