EEE investments: Get completely tax-free returns with these investments – PPF, EPF and SSY; check details | Business


Tax-Saving Investments FY 2023-24: The deadline for tax-saving investments is coming in this financial year, which is ending on March 31, 2024. While choosing investments, consider factors like lock-in period, withdrawal conditions, tax on interest. And maturity amount. For high income earners, taxability of returns is important. Taxable returns are added to your income and taxed at higher rates. Therefore, investment that offers tax-free returns Your after-tax income may increase significantly.
In the financial year 2023-24, employed people can choose between the old and new tax system. The old tax system provided deductions and exemptions, while the new tax rates are lower but there are fewer deductions. It is important to compare your tax liabilities under both the systems before making a decision. If the old system is better for you, it is important to choose the right tax-saving option.
According to a report by ET, below are the four Tax-saving investment options Which not only helps you reduce income tax but also provides returns that are completely tax-free. Remember, these benefits are exclusively for individuals who choose the old tax regime.
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Public Provident Fund (PPF)

Under Section 80C, investing in the Public Provident Fund (PPF) allows individuals to reduce their taxable income. The scheme falls under the “Exempt-Exempt” (EEE) category, which means investors can claim deductions on their invested amount, and they do not have to pay tax on the interest earned or the maturity amount. The PPF scheme is highly safe as it has a sovereign guarantee.
The interest rate of PPF is revised every quarter by the Central Government. For the April-June 2024 quarter, PPF offers an interest rate of 7.1% per annum.
The PPF account has a lock-in period of 15 years, starting from the end of the financial year in which the investment is made. Individuals can avail the loan facility from the third to sixth financial year after opening the account. Premature withdrawal is permitted from the seventh financial year onwards, subject to specific conditions. Additionally, in certain circumstances, individuals can choose to prematurely close their PPF account.
PPF account can be opened in both post office or bank. An individual can open only one PPF account in his/her name, with minimum and maximum investment of Rs 500 and Rs 1.5 lakh respectively in a financial year.

Sukanya Samriddhi Yojana (SSY)

Sukanya Samriddhi Yojana (SSY) is part of the government's “Beti Bachao, Beti Padhao” initiative, designed as a savings scheme for the girl child. This enables parents to invest in their daughter's education or marriage while enjoying income tax benefits. Similar to PPF, SSY account follows EEE tax status, which means the amount invested, interest earned and maturity amount are all tax-free.
With sovereign guarantee, SSY offers the highest security standards. The government reviews the interest rate of the scheme quarterly. Currently, for the quarter ending June 30, 2024, SSY offers an attractive interest rate of 8.2%.
The scheme has a lock-in period of 21 years from the date of account opening, with a provision for premature withdrawal under certain conditions.
Sukanya Samriddhi Yojana account can be opened by the guardian in the name of a girl child, provided she is below 10 years of age. The account can be set up in a bank or post office, with a minimum contribution of Rs 250 to a maximum of Rs 1.5 lakh per financial year. The guardian maintains the account until the girl reaches the age of 18 years.
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Employees Provident Fund (EPF) and Voluntary Provident Fund (VPF)

Salaried individuals enrolled in the Employees' Provident Fund (EPF) system are required to set aside 12% of their salary towards their EPF account, while their employer also contributes the same amount. The contribution made by the employee to EPF is eligible for tax deduction under Section 80C of the Income Tax Act. If a person wishes to contribute additional over and above the mandatory 12%, he can opt for Voluntary Provident Fund (VPF), the rules governing both EPF and VPF contributions are the same.
Managed by the government, the EPF scheme offers the highest security standards. The interest rate for EPF in 2023-24 is set at 8.25%.
The scheme has a lock-in period till retirement age, with a provision for premature withdrawal under certain circumstances, such as higher education expenses, marriage or medical treatment.
The EPF scheme enjoys EEE (exempt-exempt) tax status, provided certain conditions are fulfilled. However, starting from financial year 2021-22, if an employee's contribution to EPF and VPF accounts exceeds Rs 2.5 lakh in a financial year, the interest earned on the excess amount becomes taxable. Additionally, from financial year 2020-21, if the employer's combined contribution to EPF, National Pension System (NPS) and superannuation fund exceeds Rs 7.5 lakh annually, the surplus amount is taxable in the hands of the individual recipient. Interest, dividends and other earnings on these additional contributions are also subject to taxation. However, the maturity amount of the EPF scheme remains tax-free.
Therefore, EPF retains its EPF tax status until the contribution limits set by both the employee and the employer are exceeded.

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