In case you have opted new tax regime, you might be questioning whether or not it’s nonetheless useful to put money into PPF, SSY, and NPS. Let’s clear this dilemma.
Buyers are consistently looking out for tax benefits when contemplating an asset or product to put money into. They search out alternatives that supply tax advantages not solely on the time of funding but additionally all through the funding course of and when it comes time to withdraw funds. The enchantment of merchandise that present these benefits, referred to as EEE (Exempt-Exempt-Exempt), is plain.
Subsequently, out of all of the obtainable choices, PPF, SSY, and NPS shine brightly due to their tax benefits. Nonetheless, it is very important word that in case you select the brand new tax regime, you’ll not obtain the identical tax advantages as you do beneath the previous tax regime. In consequence, some traders desire to stay with the previous tax regime and keep away from choosing the brand new one.
For traders who’ve chosen the brand new tax regime over the previous one, the query of whether or not to proceed investing in PPF, SSY, and NPS merchandise is a typical dilemma.
Opted New Tax Regime – Ought to I cease investing in PPF, SSY, and NPS?
Let’s redirect our consideration from a single response to individually evaluating every product and coming to a choice.
# Public Provident Fund (PPF)
You in all probability already know that this is likely one of the most excellent debt merchandise at the moment obtainable for traders, providing unimaginable EEE advantages. Nonetheless, it does include a number of restrictions, equivalent to a 15-year lock-in interval and limitations on investments (most of Rs.1,50,000 per yr).
In case you have set long-term objectives that reach past 15 years, this debt product is ideal for you. Subsequently, you probably have already began investing with a particular purpose in thoughts and the PPF is a crucial debt part of your asset allocation, it is very important proceed investing with none breaks. You do not want to hassle about tax advantages obtainable or not.
In case your foremost motive for investing was to avoid wasting on taxes, it’s vital to reassess the product options primarily based in your monetary objectives earlier than making a choice. In my view, I like to recommend both persevering with to take a position or retaining the account lively with a small contribution.
It’s vital to remember that relying solely on this one product to achieve your long-term monetary goal isn’t a sensible alternative. Subsequently, it’s advisable to incorporate it as a part of your debt portfolio.
Refer my earlier posts on PPF –
# Sukanya Samriddhi Yojana (SSY)
SSY stands out as a best choice amongst debt devices for securing your lady youngster’s future. Consequently, quite a few people are opting to take a position on this scheme as a result of tax benefits it gives each on the time of funding and upon maturity. Nonetheless, for individuals who have chosen the brand new tax regime, the query of whether or not to stick with investing in SSY could come up as soon as extra.
As to the Public Provident Fund (PPF), it’s price noting that the Sukanya Samriddhi Yojana (SSY) can also be thought-about to be a wonderful debt instrument. Nonetheless, it isn’t advisable to solely depend on this explicit product for securing your daughter’s future. That is primarily as a consequence of the truth that instructional inflation is growing at a charge exceeding 8%. So as to guarantee diversification, it’s important to incorporate fairness investments alongside the SSY.
Therefore, in case you began investing in SSY as a debt a part of your lady youngster’s future, then you need to proceed. in case your choice to go for SSY as an funding is solely for tax advantages, it’s advisable to rethink.
Learn my earlier posts on SSY –
# Nationwide Pension System (NPS)
It’s designed that can assist you obtain your retirement purpose. Nonetheless, quite a few people disregard its goal and as an alternative put money into NPS solely to benefit from the additional tax advantages. It is very important remember that NPS has its personal set of professionals and cons as nicely. (Check with my earliest publish – “Nationwide Pension Scheme (NPS) – 5 Largest Disadvantages“).
Investing in NPS solely for the aim of tax saving shouldn’t be your solely consideration. As an alternative, prioritize discovering an funding choice that fits your particular person wants. If you happen to genuinely consider that NPS is the best retirement product for you, then proceed with it. Nonetheless, in case you are already a subscriber to NPS and have doubts, it could be sensible to contribute a minimal quantity. In my publish (hyperlink shared above), I’ve outlined the the explanation why I’m not significantly keen on NPS.
Conclusion- Tax planning is an integral part of monetary planning. Nonetheless, in case you funding selections solely primarily based on tax advantages, then this may increasingly result in poor funding decisions. It’s essential to fastidiously consider every product or asset, contemplating each its benefits and drawbacks. Ensure that the options align along with your monetary objectives earlier than making any selections. Keep away from making hasty selections merely due to a brand new tax regime.
