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Will the adoption of the new tax regime affect the interest on PPF?

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PPF Account: Invest Rs 250 daily and get Rs 24 lakh on maturity, check full calculation

The benefit of standard deduction available to salaried and pensioners will be applicable in both the tax slabs (new and old). This standard deduction is currently Rs 50,000.

Even if you have recently decided to choose the new tax slab, you do not need to panic. The interest received in your Public Provident Fund (PPF) account will be completely free from income tax. Let us know why.

In the old tax slab (Old Tax Regime), the taxpayer used to get the benefit of deduction on various investments and expenses under Section 80C. This also included the investment made in PPF and the interest received on it. However, in the new tax slab, the option of deduction under Section 80C has been removed. Due to this, many people might be worried whether now the interest on their PPF account will also be taxed.

Tax slab exemption

But, experts say that it is important to understand the difference between exemption and deduction in the new tax slab. The interest received on PPF comes under the exemption category, while the profits received under Section 80C come under the deduction category.

Even though the option of deduction under Section 80C has been abolished in the new tax slab, the existing exemptions will continue. This simply means that you will not have to pay any kind of tax on the interest received on PPF account. Those adopting the new tax slab will also continue to get this benefit. The changes in the new tax slab are mainly related to deductions, such as deductions available under section 80C (ELSS/life insurance premium etc.), deductions available under section 80D (mediclaim etc.) and home loan interest. Deduction etc.

Standard deduction

It is noteworthy that the benefit of standard deduction available to salary and pensioners will be applicable in both the tax slabs (new and old). This standard deduction is currently Rs 50,000. Finally, remember that whether you choose the new tax slab or remain in the old tax regime, the interest received from your PPF account will be free from income.

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