Salaried individuals adopts various ways to reduce taxes by opting new age tax saving tools, which sounds good but may not yield the desired result from tax saving and investment perspective. We are of the opinion that still today, some of the grandfather tax saving tools holds upper hand when compared to various new and innovative taxes saving linked to market. Since, these new age tools lacs on the security and liquidity front. Salaried individual living in metro cities get attracted to popular tax saving tools, such as various kinds of insurance products, market linked tax saving tools or other tax saving tool, but have paucity of awareness towards age old tax saving tools, one of which is Public Provident fund ( PPF) account. Most common asked questions about PPF Who: – An individual resident can open a PPF A/c, either for himself/herself or on behalf of minor. Where: – It can be opened at any branch of State Bank of India, its associated banks,or with some other nationalized banks, or post office etc. What: – Amount deposited is not less than Rs.500/- and not more than Rs 70,000/- in a year. As per latest .However, the Committee has also recommended an upward revision of the ceiling on annual subscriptions in PPF from Rs. 70,000 to Rs. 1 lakh. PPF provides tax exemption in a three tier system. Firstly you contribute i.e., invest in the fund. Such investment is eligible for deduction u/s 80C. At present the maximum contribution is Rs. 70,000/-. So if you are paying such amount, straightaway you can claim the amount. This in turn provides a two fold benefit, one your income is reduced and the other you get deduction on such fund outflow. Since it is government owned, its beta is almost nil. Secondly, it provides a return of around 8%, which proves to be even higher as it is tax free. Moreover, the returns are compounded. That means you not only earn interest in the money you put in, but you earn interest on the interest earned, too. And the good news is there is no tax on interest earned. As per section 10(11). Thirdly, on maturity after 15 years, you get the lump sum amount (both principal & compounded interest), and the amount is not taxable. You don’t have to pay taxes on such amount. So this is the risk free investment mechanism providing good returns, considerable tax saving and your future planning, most suitable for the present day generation. We at Taxmantra.com have the expertise in handling individual taxation issues (Tax Returns + Tax Support + Tax Planning). Please feel free to mail us at ‘info@taxmantra.com’ for any assistance.