Investing in a PPF Account is one of the best ways to save on taxes. Find out why!
The PPF (Public Provident Fund) is an investment scheme that allows individuals to invest money tax-free. It is similar to a pension plan, except that the government manages it instead of private companies.
The rate of return is also relatively high when compared to other fixed deposit schemes which give the best choice for any investor.
You Can Claim a Tax Deduction For Interest Paid.
If you have invested in a PPF account, then you can claim interest paid as a deduction against your income tax.
This means that you will not pay any additional tax on the interest earned. However, you need to keep track of the interest payments made to the PPF account.
You Can Claim Tax Deductions For Investment Losses.
If you have lost money while investing in a PPF account, you can claim investment losses as a deduction against your taxable income.
It is possible to claim such deductions even when you have not yet received the returns from the investments.
You Can Claim Tax Exemptions For Contributions Made.
If you make contributions to a PPF account, you can claim tax exemptions for these contributions.
This means that you will not pay any tax on the interest earned by the PPF account.
Not only the interest earned portion. The total capital invested is also exempted. However, the maximum amount that you can invest annually is capped at ₹1.5 lakhs.
You Can Claim Tax Benefits For Capital Gains.
In addition to claiming tax benefits for contributions made into a PPF account, there are also tax advantages associated with capital gains.
These include tax deductions for losses incurred when selling an asset, as well as tax credits for investments made in certain assets.
You Can Claim Tax Benefit For Repayment Of the Loan.
If you have borrowed money from a bank or financial institution, then you can claim tax benefits for repayment of the loan.
Loans and advances such as Education, home construction, and land purchase purpose are eligible for tax exemption. In addition to the tax benefits that you get by investing in PPF, this will help you reduce your taxable income.