Should an individual have EPF and PPF each?
2 min readCan an individual who has been contributing towards Employee Provident Fund (EPF) can even open a Provident Fund Account (PPF)? If sure then is it advisable to spend money on EPF and PPF each?
Contribution to an Employee Provident Fund account can solely be made by an individual who’s working as an worker of an organisation that has EPF scheme in place whereas a Provident Fund Account (PPF) may be opened by any Individual whether or not salaried or self-employed who’s resident of India. A PPF account may even be opened within the title of minor and housewives. There isn’t any restriction on an worker having EPF account additionally having a PPF account.
Accumulation of excellent corpus to your retirement is essential as a result of within the days of nuclear household even the kids transfer out of home for working elsewhere leaving the dad and mom are left to fend for themselves. So investing in each, in my view, is totally a superb technique as each the scheme enable you accumulate good corpus for long-term monetary objectives specifically to your retirement. Since curiosity on each these schemes is tax free, this may enable you accumulate good funds with out having to pay any tax on the earnings earned on these investments yr after yr.
The tax legal guidelines have the restriction of Rs. 2.50 lakhs of annual contribution solely upto which curiosity in your EPF account might be tax free and any curiosity earned on contribution past 2.50 lakhs yearly is absolutely taxable in your hand so PPF presents yet another avenue to speculate an addition quantity of Rs. 1.50 lakhs yearly to earn tax free curiosity. Moreover each the schemes give higher returns as in comparison with different danger free merchandise out there out there. One phrase of warning. You ought to put your cash in each these schemes holding long run horizon in thoughts as you cannot withdraw your investments in these merchandise as simply as is the case with different debt merchandise like debt schemes of mutual funds and financial institution mounted deposits.
Balwant Jain is a tax and funding knowledgeable and may be reached on jainabalwant@ gmail.com and @jainbalwant on Twitter
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