PPF under New Tax Regime: Is it still a smart investment?

PPF under New Tax Regime: Is it still a smart investment? Tezzbuzz | 2025-02-17T03:24:07+08:00

New Delhi: Public Provident Fund (PPF) is considered to be a safe and secured long-term investment and tax saving scheme. It is a very popular investment scheme amongst the masses as it is completely tax-free. In this article, we inform you about how to take advantage of PPF in the new tax regime.

In the new tax system, an individual does not get the benefit of deduction up to Rs 1.5 lakh on investment in PPF, whereas this benefit was available in the old tax regime. So, PPF account holders are not eligible to get any tax relief under Section 80C in the new tax regime. It may be noted that the interest and maturity amount of PPF will remain completely tax-free even in the new tax system.

PPF benefit in Old Tax Regime

If you file your tax return under the old tax regime, then you get the benefit of tax deduction under Section 80C on investments up to Rs 1.5 lakh in PPF. Interest and maturity amount of the Public Provident Fund remain tax free.

PPF in New Tax Regime

PPF is not just a tax saving scheme, but is considered an investment and savings plan for a long term. In this, the facility of tax-free maturity is available with guaranteed returns.
There is no tax on the maturity amount in both the new and old tax regimes, which increases the total returns significantly.

Even though the facility of 80C deduction on PPF is not available in the new tax system, the plan is beneficial from an investment point of view. However, those who are investing in it just to save tax and are opting for the new tax regime, they will not be able to reap benefits.

Currently, PPF offers an interest rate of 7.1 per cent. According to the rules, a depositor can invest a minimum deposit of Rs 500/- and a maximum deposit of Rs 1,50,000/- in a financial year. Interest earned in the account is free from Income Tax under Section -10 of IT Act. PPF calculator, if a depositor invests Rs 1.5 lakh per year for 15 years, the tax-free maturity amount after the end of tenure could be up to Rs 40.68 lakh as per the current 7.1 per cent interest rate.