Income

PPF Explains How Raising Income Tax Section 80C Can Give Relief to an Ordinary Man

Budget 2022 expectations: With less than 48 hours left for Union Finance Minister Nirmala Sitharaman to present her third general budget to parliament, the ordinary man or middle class in India is eagerly awaiting tax relief on the income offered by the Institute of Chartered Accountants of India (ICAI) is achieved or not.

The ICAI has suggested to the Narendra Modi government to raise the limit of Section 80C of the Income Tax Act by 1.50 lakh per year for 3 lakh while he also advised the Ministry of Finance to raise the annual cap on deposits of the Public Provident Fund (PPF) by 1.50 lakh to 3.0,000,000. ICAI strongly believes that increasing the annual PPF deposit limit would boost GDP from domestic savings and help the Indian government to contain soaring inflation, which is a major concern for India. current world economy.

PPF Calculator

If this ICAI suggestion is met on February 1, 2022, PPF account holders will be able to invest double their current annual limit of 1.50 lakh in a single financial year. Other than that, it will be 100% “EEA” means totally exempt from any income tax expense on the investment, PPF interest earned and PPF maturity amount after the 15-year lock-up period . As the PPF account can be extended by block of 5 years for an infinite number of times, the PPF calculator suggests that one can become a crorepati by investing 3 lakh per year in his PPF account for 20 years. The calculation was maintained maintaining the current PPF interest rate of 7.10 for the entire period.

In the current scenario, if a person invests 1.50 lakh per annum for 20 years, assuming a current PPF interest rate of 7.10%, one will be able to obtain a PPF maturity amount of 66,58,288.

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Source: PPF Groww calculator

However, in the case of Narendra Modi, the government agrees to implement the ICAI suggestions in the 2022 budget, doubling the section 80C and the PPF deposit limit, in this case, a person will be able to invest up to 3 lakh in his PPF account in a financial year, which doubles his PPF due amount.

PPF account would make you a crorepati

So, in the event that Union Finance Minister Nirmala Sitharaman doubles the Section 80C limit and the PPF deposit limit, one will get a PPF maturity amount of 1,33,16,576 ( 66,58,288 x 2) after investment 3 lakh per year for 20 years.

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