15 year Public Provident Fund Account

Interest payable, Rates, Periodicity etc.

• 8.80% per annum   w.e.f. 01.04.2012
   

Investment limits and Denominations

• Minimum INR. 500/-
• Maximum INR. 1,00,000/- in a financial year.
• Deposits can be made in lumpsum or in 12 installments.

Salient features including Tax Rebate

1. Deposits qualify for deduction from income under Sec. 80C of IT Act.
2. Interest is completely tax-free.
3. Withdrawal is permissible every year from 7th financial year.
4. Loan facility available from 3rd Financial year.
5. No attachment under court decree order.

Tax Planning - Deduction with respect to House Rents

House Rent is a major component of expenditure in personal financial planning.

In case of individuals working in a company, house rent is evaluated under House Rent Allowance (as per Section 10(13A) read with rule 2BA).

In case of individuals with business or profession, the following rule applies:

Rent paid (furnished/unfurnished) by the individual must be in excess of 10% of the total income.

Allowable deduction:

1. Excess of rent paid over 10% of total income
2. TWO thousand rupees per month
3. 25% of total income

Least of the above is allowed

Example - A sole proprietor trader's annual business turnover is 14,50,000. He pays annual rent of 2,40,000 and an additional maintainance of 18,000/-. His claim of deduction under section 80 GG.

 

Excess of rent paid over 10% of total income = 95000

TWO thousand rupees per month                  = 24000

25% of total income                                      = 362,500

Least of the above = 24000

Deductable under section 80 GG for Sole Propietor = 24000

Net Taxable income = 14,50,000 - 24,000 = 14,26,000