Institute of Chartered Accountants suggests hike in PPF limit and 80C deduction

The Institute of Chartered Accountants (ICAI) has recommended to Finance Minister Nirmala Sitharaman that the maximum ceiling for PPF investments be increased from Rs 1.5 lakh to Rs 3 lakh.

The ICAI mentioned the PPF as the only safe and tax-effective savings scheme. ICAI also said that it believes that the increase in the PPF deposit limit will boost household savings as a percentage of GDP and have an anti-inflationary effect. The ICAI also said that it believes a raise in the PPF deposit limit would give a boost to domestic savings as a percentage of GDP. This will have an anti-inflationary effect, the premier organisation said.

Key Suggestions of ICAI

• The annual limit of contribution to PPF should be increased from the present limit of Rs 1.5 lakh to Rs 3 lakh.
• The maximum limit of deduction under section CCF can be increased from Rs 1.5 lakh to Rs 3 lakh.
• The quantum of deduction under section 80C is being increased from Rs 1.5 lakh to Rs 2.5 lakh to provide opportunities for savings to the public at large.

What is PPF?

The Public Provident Fund (PPF) was established in India in 1968 with the goal of mobilising small deposits through investment and earning a return. It's also known as a savings-cumulative-tax savings investment vehicle since it allows you to create a retirement fund while lowering your annual taxes. A PPF account is a safe investment choice for anyone wishing to save taxes and earn assured profits.

The interest and returns earned are not taxable under the Income Tax Act. Under this system, one must create a PPF account, and the amount contributed during the year will be claimed as a deduction under section 80C.