Investment: Taxpayers want to save tax, and know which is the best option between PPF and FD…

FD also has some disadvantages but PPF provides relief from income tax. The interest received on FD is subject to tax as per the tax slab of any person. But FD returns cannot always beat inflation. This means that the real value of your savings is at risk of falling over time. There is no guarantee from the government on FD. But PPF is guaranteed by the government.

Many taxpayers choose PPF for fixed-income, tax-saving investments keeping their retirement and retirement plans in mind. Tax experts say that the Public Provident Fund is best for people who are looking for long-term savings along with tax savings and safe investment options. Whereas FD gives more flexibility. This is a good option for investors. Overall, investment in PPF will have to be made in the long term and this is not the case in FD.

Investing in PPF is eligible for tax deduction under Section 80C of the Income Tax Act. That means your tax liability is reduced by investing in it. But the interest on maturity of PPF and the amount you receive is tax-free. This is an attractive scheme for the salaried class from the point of view of tax saving.

The current interest rate on PPF is 7.1 percent for the July-September quarter. But SBI is giving 6.50 percent interest on tax-saving FD.

If you invest in FD at a low-interest rate for a long period, you will suffer a loss if the interest rate increases. For this reason, a PPF gives better returns than a five-year tax-saving FD. FD interest rates remain constant throughout the investment period. At the same time, the interest rate of PPF is floating which can change every quarter.

There is the benefit of compounding in PPF. This account matures in 15 years. After maturity, you can close the account by withdrawing money or extending it for five years to continue investing.

If needed, you can make a partial withdrawal from PPF. In the seventh year of investment, you can withdraw money for medical, emergency, or needs like children’s education or marriage. FD is a good option for a short investment period. But PPF is best in the long term.

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