Union Budget 2021-22 Predictions: The Institute of Chartered Accountants of India, or ICAI, has in its pre budget memorandum sent recommendations regarding the Public Provident Fund scheme. Under this, the ICAI has said that the maximum annual limit for PPF deposits should be increased. They have demanded that the deposit limit must be increased to Rs 3 lakh in view of the current scenario. The ICAI recommendation on PPF budget limit increase comes weeks before the Budget session kicks off at the Parliament. The session is supposed to start on February 1 this year and is expected to discuss a host of issues. Union finance minister Nirmala Sitharaman will present the annual Budget before the Parliament on this day.
The premier institute made the recommendation before the Union Budget 2022-23, as per reports. It said that the increase in the deposit limit of PPF is important as is the only safe and tax-efficient savings scheme which is made available to self-employed persons as well as salaried individuals. The ICAI also said that it believes a raise in the PPF deposit limit would give a boost to domestic savings as a percentage of GDP. This will have an anti-inflationary effect, the premier organisation said.
“While the assessees in employment have the compulsion of saving 12 per cent of their salary (with a matching contribution from employers), the only safe and tax-efficient option available for self-employed assessees is PPF. Hence, the suggestion to increase the ceiling of PPF contribution to Rs 3 lakhs,” said the ICAI, as reported by the Financial Express.
“This may also boost the domestic savings as a percentage of GDP and will have an anti-inflationary impact,” the report quoted ICAI as saying. The institute note that PPF is used as a means for savings by salaried individuals as well as entrepreneurs.
The ICAI noted that the present limit of Rs 1.5 lakh to deposit money in the PPF accounts has not been changed for several years. “The revised monetary limit will help in increasing the savings of individuals and is necessary keeping in view the rate of inflation,” it said.
What are the Key Suggestions Made by the ICAI?
Here are the key suggestions sent by the ICAI in its pre-Budget memorandum regarding PPF to the Centre.
a) Annual limit of deposit in PPF account be increased to Rs 3 lakh from the current Rs 1.5 lakh limit.
b) The maximum limit for deduction under SectionCCF should be hiked from Rs 1.5 lakh to Rs 3 lakh.
c) In a bid to provide savings opportunities to citizens at large, the ICA suggested that the quantum of deduction under Section 80C be increased to Rs 2.5 lakh from Rs 1.5 lakh.
What is PPF?
The Public Provident Fund or PPF is one of the most popular, long term investment options in India. It is a retirement savings policy provided by the Indian government to create long term wealth for investors post retirement. Introduced in 1968 by the Ministry of Finance’s National Savings Institute, PPF has become a powerful tool for Indians wherein they can enjoy tax benefits. The scheme has emerged as one of the most sought-after investment options due to the safety, returns and tax benefits it offers.
This government-backed scheme is a form of a small savings policy and ensures to provide assured returns at the time of its maturity, which makes it so loved among investors.