Tax Benefit on PPF Account, Tax Exemption on PPF

PPF investments made every financial year are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. PPF is an investment vehicle that falls under the category of Exempt-Exempt-Exempt (EEE) tax basket. There are 3 types of tax benefits available under PPF:

(A) Income Tax Rebate: Income Tax Rebate u/s 80C is available, up to Rs 1,50,000/- p.a. All the deposits (maximum upto Rs 1.5 lakhs) made to the PPF account during one financial year can be claimed as deductions u/s 80C. Contributions to PPF accounts of your spouse and children are also eligible for tax deduction for you. However, the same rule does not apply to your parents, siblings or relatives.

The deduction limit for PPF deposits was maximum upto Rs.1 lakh which has been increased to Rs.1.5 lakhs from Financial Year 2014-15.

(B) Tax Free Returns: Interest earned is not taxable under PPF Account. Interests earned from PPF deposits are completely tax-free.

(C) Tax Free Maturity: Tax Free maturity is available under PPF investments. The accumulated amount including interest would also be exempt from tax at the time of withdrawal.

PPF offers Triple Tax Benefits as mentioned above.