The Hindu Business Line : Tax benefit on PPF

I contribute Rs 70,000, the maximum permissible, every year to my PPF account. I am told there will not be any tax benefit for such contributions from next year. Should I stop contributing?

Brahmananda Raju, Cuddapah

The Direct Taxes Code Bill, 2009 has proposed discontinuance of tax benefit to one’s contribution to PPF among other things, perhaps to make the Government’s New Pension Plan take off. One has the feeling that the Government might not implement the DTC in its present form because it is riddled with several irrationalities and half-baked proposals even though at first flush it looks impressive with its steep reduction in tax rates.

Even if the PPF scheme is rendered unattractive when the tax benefits are wrenched away, you may have to carry on with minimum contributions of Rs 500 per year till its maturity, unless of course the PPF rules are concomitantly amended to allow premature exit.

S. MURLIDHARAN

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