PPF Calculator: You can double Public Provident Fund income and save income tax outgo – you will need this help

• CA Chandan Agarwal's Office

A Public Provident Fund (PPF) account is an EEE investment where the investor gets income tax exemption on investment up to Rs 1.5 lakh per annum, PPF interest earned and the PPF maturity amount. However, an earning individual can’t have more than one PPF account and one can’t invest more than Rs 1.5 lakh in one PPF account in a particular financial year. But, a married man can double his PPF investment by opening a PPF account in the name of his wife. This will help the earning individual to invest in PPF up to Rs 3 lakh per annum (Rs 1.5 lakh in self and Rs 1.5 lakh in wife’s PPF account).

Speaking on how one’s wife can help double annual PPF investment limit, Harsh Roongta, Head at Fee Only Investment Advisers said, “If an earning individual has exhausted one’s PPF account limit in a particular financial year and still wants income tax exempted income, then opening a PPF account in the name of one’s wife is advisable. By doing this, one will be able to double one’s PPF investment cap to Rs 3 lakh. However, the overall income tax exemption under Section 80c on investments will continue to remain capped at Rs 1.5 lakh per annum.”

On how income tax calculator works after PPF account opening in the name of the wife, Manikaran Singhal, Founder at goodmoneying.com said, “If an earning individual invests in wife’s PPF account, the source of investment would continue to remain with the husband and the PPF interest earned in wife’s PPF account will get clubbed with husband’s income too. But, the PPF interest is income tax exempted and in that case even if the wife’s PPF interest earned during the year is clubbed with husband’s income, it will remain income tax exempted.”

“Such move is advisable for those investors who have low risk appetite and they don’t want to invest in the market-linked investment tools like mutual funds, stocks, NPS, etc.,” concluded Harsh Roongta of Fee Only Investment Advisers.

Currently, PPF interest rate is 7.1 per cent, which is highest after EPF interest rate and Sukanya Samriddhi Yojana interest rates.

Source: https://www.zeebiz.com/personal-finance/ppf/news-ppf-calculator-you-can-double-public-provident-fund-income-and-save-income-tax-outgo-you-will-need-this-help-151883