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Home Personal Finance PPF may bring good news to investors, suggestion to increase interest rate...

PPF may bring good news to investors, suggestion to increase interest rate and decrease maturity period

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The SBI Economist recommends that the government keep parity in the interest rates of EPF and PPF.

Since the introduction of Budget 2021, there have been many changes regarding the Public Provident Fund. Earlier, the income earned from it was brought under the tax net, now it is being talked about reducing its maturity period. The SBI Economist suggests that the government reduce the lock-in period for PPF by 15 years and give investors freedom to withdraw their money.




State bank economists praised the government’s decision to withdraw the decision to cut interest on small savings schemes. They say that in the midst of the corona epidemic, the government has taken the right decision not to change the interest rate on saving schemes. Apart from this, three important suggestions have also been made to make these schemes more attractive. A suggestion in this relates to the Public Provident Fund.

The government guarantees the money of investors in PPF. It is a long term small saving scheme aimed at giving retirement security to self-employed people. The SBI economist suggests that the government first reduce its 15-year lock-in period. He suggests that the government should allow money to be withdrawn from it within a stipulated time, although fine may be charged for not promoting this culture. The calculation of interest on PPF is done on a quarterly basis. Currently, the interest rate on this is 7.1 percent. The interest rate on EPF for the financial year 2020-21 is 8.5 per cent. The economist recommends that the government keep parity in the interest rates of EPF and PPF.

In the Budget 2021, Finance Minister Nirmala Sitharaman brought the Public Provident Fund under the tax net. Under the new rule, if you invest more than 2.5 lakh PPF, the interest will be subject to additional income tax on the additional amount. However, in the Finance Bill 2021, its limit was increased to 5 lakhs. Now up to 5 lakh investment in PPF is tax free in a financial year. If you invest more than that, the interest income will be taxable. Investment in PPF gives tax deduction under 80C up to 1.5 lakhs. Interest income is completely tax free and maturity is also tax free.

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