What are the disadvantages of provident fund?
What are the disadvantages of EPF?
- EPF account requires you to deposit a regular amount of money throughout your professional life.
- During their working life, employees cannot withdraw money from the fund.
- The account cannot be closed earlier than retirement, except only on the death of the subscriber.
What are the disadvantages of withdrawing PF amount?
Disadvantages
- The member withdraws amount which is usually blown away by discretionary expenses and retirement savings are back to square one.
- If the individual withdraws his Provident Fund balance before completing five years then the amount becomes taxable.
Why we should not withdraw PF?
Should you withdraw? Irrespective of whether it is for a specific purpose such as home purchase or medical treatment or COVID relief, I would not recommend withdrawing from EPF. This is because the EPF is a long-term financial instrument for securing your retirement.
Is EPF money safe?
EPF enjoys the EEE (exempt-exempt-exempt) tax regime, which means it is tax free at the three stages of contribution, interest amount accrual and withdrawal. It’s a government-backed scheme, which makes it a safe instrument.
What is the lock-in period for PPF?
15 years
Can I deposit more than 1.5 lakh in EPF?
As there is no contribution by the employer (i.e., the government), employees of the government sector can contribute a maximum of Rs 5 lakh into their PF accounts in a financial year to earn tax-exempt interest.
Can I invest more than 1.5 lakh in EPF?
If you don’t want to get into the dilemma of choosing and buying the most appropriate investment option to avail tax benefits, then you can simply increase your VPF so that the EPF and VPF contributions total up to Rs 150000. The interest earned and maturity amount is tax exempt.
What if I invest more than 1.5 lakhs in PPF?
However, an earning individual can’t have more than one PPF account and one can’t invest more than Rs 1.5 lakh in one PPF account in a particular financial year. However, the overall income tax exemption under Section 80c on investments will continue to remain capped at Rs 1.5 lakh per annum.”
Why is NPS better than PPF?
PPF vs NPS Calculator: Public Provident Fund (PPF) and National Pension System (NPS) are widely considered long-term investment tools. However, PPF is completely a debt instrument while NPS scheme is market-linked investment tool. But, an NPS return is market-linked as NPS account gets exposure in both equity and debt.
How can I save tax beyond 1.5 lakhs?
Section 80CCD (1B) allows an additional tax deduction of up to Rs 50,000 on contribution in NPS Tier I Account. This deduction is over and above the deduction available on contribution of up to Rs 1.5 lakh in the NPS Tier I account under Section 80C.
Can I save tax more than 1.5 lakh?
Investment options under Sec 80C The most popular tax-saving options available to individuals and HUFs in India are under Section 80C of the Income Tax Act, Section 80C includes various investments and expenses you can claim deductions on – up to the limit of Rs. 1.5 lakh in a financial year.
What is the 80C limit for 2020-21?
Rs 1,50,000
What is the new income tax slab for 2020-21?
Income tax slab rate applicable for New Tax regime – FY 2020-21.
| Income Tax Slab | New Regime Income Tax Slab Rates for FY 2020-21 (Applicable for All Individuals & HUF) |
|---|---|
| Rs. 5.00 lakhs- Rs 7.5 Lakhs | 10% |
| Rs 7.5 lakhs – Rs 10.00 Lakhs | 15% |
| Rs 10.00 lakhs – Rs. 12.50 Lakhs | 20% |
| Rs. 12.5 lakhs- Rs. 15.00 Lakhs | 25% |
Is 80C removed in 2020?
[Budget 2020] Tax Rates Lowered But HRA, 80C, and INR 50,000 Standard Deduction Gone. Further, those with an annual income of INR 10-12.5 lakh will pay 10 percentage points less in taxes, while income of INR 12.5-15 lakh will get a 5 percentage points concession from the current applicable tax rates.