RBI has notified and approved the increase in investment limit for investing in Public Provident Fund (PPF) scheme. This was a long pending demand from majority of investors. PPF is a wonderful financial product which offers dual benefits of tax deduction and good ROI. It has been considered as one of the safest long term investment options for employees along with EPF. The new PPF limit in 2014 is Rs. 1.5 lakh p.a.
What was the previous limit?
As we know, investment in this product qualifies for deduction under Section 80C. Until now, the limit was capped at Rs. 1 lakh p.a, on par with the tax deduction limit available under Section 80C.
How will the new limit benefit investors?
Investors can reap dual benefits of higher tax saving and greater corpus through this increase in PPF limit.
- Higher Tax Saving - Since the new 80C deduction limit is also Rs. 1.5 lakh p.a, you can invest greater amount in PPF instead of any other random product to avail this limit. This gives you higher tax saving in the form of tax deduction and tax free interest.
- Greater Corpus - Higher investment in PPF leads to a higher maturity value. The current interest rate on PPF is 8.7% p.a.