Public Provident Fund (PPF) is a better option for investors who want to take advantage of tax exemption with safe and high return on investment. Investment in this gets tax exemption of up to Rs 1.50 lakh under section 80C. PPF is currently earning 7.1 per cent interest, but if you deposit the amount before the 5th of every month, you can earn a much higher return on your savings.
Understand the advantage of depositing in this way
Interest on PPF is calculated every month but is paid on an annual basis. Interest on PPF is calculated on the minimum deposit from the last date of the current month to the 5th of the following month. If you deposit two thousand every month in PPF, then you get interest only on that amount.
These seven rules related to your Income Tax will change from April
But if you deposit the money of that month before the 5th of the month, then you get the interest for that whole month on that amount. In such a situation, instead of two thousand, you get interest on the deposit of four thousand rupees.
Triple benefit of tax exemption in PPF
PPF is one of the few options in small savings schemes in which the amount received on maturity along with investment and interest gets tax exemption on all three. You can avail tax exemption of up to Rs 1.50 lakh on investment in PPF. You can invest a minimum of Rs 500 in this. Also, PPF cannot be deposited more than 12 times in a financial year. You can also deposit Rs 1.50 lakh in one go.