Under Section 80C gives you up to maximum of Rs. 1,00,000 tax free income in a year if they invest in or buy the following.
1. Premium for Life Insurance or ULIP
2. Provident Fund (PF) contribution
3. Public Provident Fund (PPF) – only up to Rs. 70,000 in a year
4. Repayment of home loan principal
5. Equity Linked Savings Schemes (ELSS) of Mutual Fund Companies
6. Infrastructure Bonds
7. National Savings Certificates (NSC)
8. Tax Saving Fixed Deposits with Banks
9. Tuition Fees of children
Public Provident Fund (PPF)
- Minimum Deposit : Rs.500/-
- Maximum Deposit: Rs.7000/-(in a year and max 12 installments)
- Maturity: 16 years
- Interest: 8%
In Public Provident Fund, you need to open a PPF account in State Bank of India, or subsidiary branches, select branches of nationalized banks or the head post office or selection grade sub post offices also open PPF accounts.
All you need to do is fill a form, submit a PAN copy with passport copy and you are as good as done.You get a passbook for deposits, interest, withdrawals and loans. Anybody expect NRI’s can open a PPF account. And you can have only one PPF account.
At a time you the minimum you can deposit is Rs. 500/-
Max Amount you can invest in a year is Rs. 70,000/- . Maximum a depositor can make a maximum 12 installments in a financial year.The current rate of interest is 8% per annum, compounded annually. The interest for the month is calculated on the minimum balance available in the account from 5th of a month to the last date of the month.
A PPF account matures on the first day of the 17th year.Now this is going to be one of the toughest conditions, that you cannot extract the amount before maturity unless you are dead.
It is a brilliant tax saver as the amount you deposit in the PPF account is exempted from tax and even the proceeds after maturity are untouched by tax. You can extend the period of PPF account by a block of 5 years.
Nomination facility is available, in case of death the amount will be handed over to the nominees.
Now another brilliant feature is the availability of loan
- A depositor can avail of loan facility in the third financial year from the financial year in which the account was opened.
- The loan can be taken up to 25% of the amount in the account at the end of the second year immediately preceding the year in which the loan is applied for.
- The loan is repayable in lump sum or convenient installments. Where loan is repaid within 36 months, interest is charged at 1% and if it is not repaid within 36 months, the interest at the rate of 6% is charged on the outstanding balance.
- A second loan can be obtained before the end of the 6th financial year if the first one is fully repaid.
Deposits are exempt from wealth tax.
The balance amount in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability. So even if you go bankrupt, PPF will always be yours.
While claiming tax exemption, all you have to do is provide a copy of the passbook showing the statements of deposits in the period of April of one year to the March of the next.
Breaking News : The return on the Public Provident Fund ( PPF) scheme in the current fiscal year is expected to be 8.6%, up from 8%. The annual ceiling on PPF accounts will now go up to Rs 100,000 from the current Rs 70,000.
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