New Income Tax Bill 2025: Does Investing In PPF Still Make Sense

The most popular deductions under Section 80C are available for policyholders and will now be categorized under Section 123. This will include contributions to life insurance plans, contributions to unit-linked insurance plans (ULIPs), subscriptions to national savings certificate (NSC), and contributions to the Public Provident Fund (PPF), among others. Apart from this, the taxation of PPF has seen no change. 

The 80C deduction was increased from Rs 1 lakh to Rs 1.5 lakh in Budget 2014, after which it has remained the same. There had been expectations that the limit would be increased, but that did not happen and was more unlikely to happen after the government introduced the new tax regime and started incentivizing people to move to it. 

Under the old tax regime, PPF deposits during the year can be claimed as a deduction up to Rs 150,000 under 80C. For those opting for the new tax regime, this deduction is not available. Does this make PPF a less attractive option for investment? 

One needs to mandatorily deposit Rs 500 per year for the period of 15 years under PPF. This is irrespective of what regime the taxpayer chooses. Since the amounts are locked for a period of 15 years, on withdrawal, the taxpayer has access to a significant sum of money along with interest.  

“The interest on PPF is approximately seven per cent which is tax exempt. Hence it is still a good investment avenue for a person who is risk averse as it is more advantageous than fixed deposits,” says Aarti Raote, partner, Deloitte India. 

It is important to remember that the withdrawals are tax-free under both regimes. “Hence it is advisable for the taxpayers to not base their decisions on taxation but take a long-term view of things. PPF is definitely a safe and secure option to save money for the future though it may not be as lucrative as the other risky options available,” says Raote. 

There are no financial implications other than the non-availability of the deduction up to Rs 150,000 under 80C if one switches to the new tax regime. So, PPF still remains an attractive option for long-term savings.