Union Budget 2023-24 Expectations: Public Provident Fund (PPF) investment limit should be increased to Rs 3 lakh per year from the current limit of Rs 1.5 lakh, the Institute of Chartered Accountants of India (ICAI) has demanded in the Pre-Budget Memroandum 2023 submitted to the Government.
The PPF investment limit has not been raised for the last several years even as total investment in the scheme and its popularity have been growing. PPF attracts investors because of the triple tax benefits offered by the scheme. Investment up to Rs 1.5 lakh/year in PPF qualifies for tax deduction under Section 80C. Also, there is no tax on the interest earned and the amount withdrawn at the time of maturity.
Why ICAI wants a change in the PPF limit
Increasing the ceiling of PPF contribution can boost domestic savings and also benefit account holders, according to ICAI.
“PPF is used as a means of savings by entrepreneurs and professionals. While the assessees in employment have the compulsion of saving 12% of their salary (with matching contributions from employers), the only safe and tax-efficient saving option available for self-employed assessees is PPF. Hence, the suggestion to increase the ceiling of PPF contribution to Rs.3 lakhs. This may also boost the domestic savings as a percentage of GDP and will have an anti-inflationary impact,” ICAI said.
“Further, the present limit of INR. 1,50,000 has not been increased for several years and requires reconsideration. The revised monetary limit will help in increasing the savings of individuals and is necessary keeping in view the rate of inflation,” it added.
The ICAI had made the suggestion to increase the PPF investment limit in its pre-budget memorandum for Budget 2022 as well. However, the suggestion was not accepted.
Union Finance Minister Nirmala Sitharaman is expected to present Union Budget 2023-24 on February 1, 2023, while the Economic Survey 2022-23 may be presented on January 31.