The interest earned on PPF is not taxable. PPF comes under the Exempt-Exempt-Exempt (EEE) category. This means that the principal amount, interest earned and maturity amount of PPF are completely tax free. Let us know the tax benefit available on PPF…
PPF Scheme: Investors prefer the Public Provident Fund (PPF) scheme as it comes under the Exempt-Exempt-Exempt (EEE) category. At the same time, the interest received under the PPF scheme is also not taxable. The first exemption is on the amount deposited in the PPF account through you. Deposits in PPF account are exempted from tax up to a maximum of Rs 1.5 lakh per annum. Under Section 80C of the Income Tax Act, 1961, tax savings of up to Rs 1.5 lakh can be made in a financial year.
PPF Scheme
The second exemption is on the interest you get on your PPF deposits. So, if you are wondering whether PPF interest is taxable or not, the answer is no. It is tax free. The third tax exemption of PPF is on the maturity amount. When the PPF account matures after 15 years, the maturity proceeds you get on withdrawal will also be tax free. Considering the EEE benefits offered through Public Provident Fund, it is certainly one of the best options to generate long term savings.
Tax Benefits and Features of PPF
Rs 1.5 lakh in a financial year is eligible for tax deduction under section 80C of the Income Tax Act, 1961. The account holder can claim the deduction within the given limit.
Tax benefits for all investors
Due to the EEE status of PPF investment, it provides tax benefits to the investors, irrespective of the tax bracket they belong to. For investors in the highest 30% tax bracket, annual PPF investments up to a maximum limit of Rs 1.5 lakh in a financial year can reduce tax liability. As a bonus, the maturity amount of PPF will also be completely tax-free.
Is interest on PPF taxable?
The interest earned on PPF is not taxable. PPF comes under the Exempt-Exempt-Exempt (EEE) category. This means that the principal amount, interest earned and maturity amount of PPF are completely tax free.
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