highlights
PPF and tax-free bonds are considered low-risk tax-saving investments.
You do not have to pay income tax on either tax-exempt bonds or PPF.
You also get an attractive interest rate of 7.1 percent in the PPF.
New Delhi. Whenever you invest anywhere, expect maximum returns. But where the return is higher, the risk is the same. In such a situation, investors are looking for an option where they can earn more returns while paying a minimum tax. With similar investments, most people build up a sizeable retirement fund while still in the workforce.
If you’re also saving money for your retirement, you’ve probably heard of PPF and tax-free bonds. Most people are unsure about these two and where they can get more benefit by investing in them. Here we talk about it.
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These investments are low risk
Both PPF, i.e. Public Provident Fund, and tax-free bonds are such investment options that are considered a low-risk investment for tax savings. PPF is a government-guaranteed scheme, while tax-free bonds are issued by state-owned companies and have better credit ratings. Because of this, they are considered reliable by investors.
do not have to pay income tax
Explain that you don’t have to pay income tax on tax-exempt bonds. Likewise, PPF gives you tax benefits under Section 80C of the Income Tax Act 1961. In addition, the interest earned on PPF is also tax free. Investments up to 1.5 lakh rupees in PPF are exempt from Section 80C tax. The term of PPF is 15 years, while the term of tax-free bonds is also usually 10, 15 or 20 years.
Which of the two is better for investing?
Saving only for retirement means you won’t use that amount anywhere else. With this form of investment, you deposit money in small installments. In such a situation, PPF is a good option for you. You will also receive an attractive tax-free interest rate of 7.1 percent. However, if you want to invest a large amount at once, tax-free bonds are better for you. These bonds are issued by public sector companies and are typically rated AAA and therefore carry the lowest credit risk. The average return on bonds is between 5.5 and 6.5 percent. At the same time, you can leave them at any time.
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Tags: business news, Business News in Hindi, income tax, investments, ppf, PPF account
FIRST RELEASED : June 09, 2023 11:27 AM IST
