If in case you have opted new tax regime, you could be questioning whether or not it’s nonetheless helpful to spend money on PPF, SSY, and NPS. Let’s clear this dilemma.
Traders are consistently looking out for tax benefits when contemplating an asset or product to spend money on. They search out alternatives that supply tax advantages not solely on the time of funding but in addition all through the funding course of and when it comes time to withdraw funds. The attraction of merchandise that present these benefits, generally known as EEE (Exempt-Exempt-Exempt), is simple.
Due to this fact, out of all of the out there choices, PPF, SSY, and NPS shine brightly due to their tax benefits. Nonetheless, you will need to be aware that in case you select the brand new tax regime, you’ll not obtain the identical tax advantages as you do beneath the outdated tax regime. In consequence, some buyers favor to stay with the outdated tax regime and keep away from choosing the brand new one.
For buyers who’ve chosen the brand new tax regime over the outdated one, the query of whether or not to proceed investing in PPF, SSY, and NPS merchandise is a typical dilemma.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 call.
# Public Provident Fund (PPF)
You in all probability already know that this is without doubt one of the most excellent debt merchandise at the moment out there for buyers, providing unimaginable EEE advantages. Nonetheless, it does include a number of restrictions, reminiscent of a 15-year lock-in interval and limitations on investments (most of Rs.1,50,000 per 12 months).
If in case you have set long-term objectives that reach past 15 years, this debt product is ideal for you. Due to this fact, if in case you have already began investing with a selected aim in thoughts and the PPF is a crucial debt part of your asset allocation, you will need to proceed investing with none breaks. You don’t want to trouble about tax advantages out there or not.
In case your most important purpose for investing was to save lots of on taxes, it’s essential to reassess the product options primarily based in your monetary objectives earlier than making a call. In my view, I like to recommend both persevering with to speculate or protecting the account lively with a small contribution.
It’s essential to understand that relying solely on this one product to succeed in your long-term monetary goal isn’t a wise alternative. Due to this fact, 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 speculate on this scheme as a result of tax benefits it affords each on the time of funding and upon maturity. Nonetheless, for many who have chosen the brand new tax regime, the query of whether or not to stick with investing in SSY might come up as soon as extra.
As to the Public Provident Fund (PPF), it’s value 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 specific product for securing your daughter’s future. That is primarily resulting from the truth that academic inflation is rising at a price exceeding 8%. In an effort 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 will help you obtain your retirement aim. Nonetheless, quite a few people disregard its objective and as a substitute spend money on NPS solely to benefit from the additional tax advantages. You will need to understand that NPS has its personal set of execs and cons as properly. (Consult with my earliest publish – “Nationwide Pension Scheme (NPS) – 5 Greatest Disadvantages“).
Investing in NPS solely for the aim of tax saving shouldn’t be your solely consideration. As a substitute, prioritize discovering an funding choice that fits your particular person wants. In the event you genuinely consider that NPS is the perfect retirement product for you, then proceed with it. Nonetheless, in case you are already a subscriber to NPS and have doubts, it might be sensible to contribute a minimal quantity. In my publish (hyperlink shared above), I’ve outlined the the reason why I’m not notably keen on NPS.
Conclusion- Tax planning is an integral part of monetary planning. Nonetheless, in case you funding choices solely primarily based on tax advantages, then this will likely result in poor funding selections. It’s essential to rigorously consider every product or asset, contemplating each its benefits and drawbacks. Be sure that the options align along with your monetary objectives earlier than making any choices. Keep away from making hasty choices merely due to a brand new tax regime.
