When you’ve got opted new tax regime, you could be questioning whether or not it’s nonetheless useful to put money into PPF, SSY, and NPS. Let’s clear this dilemma.
Buyers are continuously looking out for tax benefits when contemplating an asset or product to put money into. They search out alternatives that provide 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 attraction of merchandise that present these benefits, often called EEE (Exempt-Exempt-Exempt), is simple.
Subsequently, out of all of the out there choices, PPF, SSY, and NPS shine brightly due to their tax benefits. Nevertheless, you will need to notice that when you select the brand new tax regime, you’ll not obtain the identical tax advantages as you do underneath 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 standard 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 without doubt one of the most excellent debt merchandise at the moment out there for traders, providing unimaginable EEE advantages. Nevertheless, it does include a number of restrictions, comparable to a 15-year lock-in interval and limitations on investments (most of Rs.1,50,000 per yr).
When you’ve got set long-term targets that stretch past 15 years, this debt product is ideal for you. Subsequently, if in case you have already began investing with a selected purpose in thoughts and the PPF is a vital debt element of your asset allocation, you will need to proceed investing with none breaks. You don’t want to hassle about tax advantages out there or not.
In case your important motive for investing was to save lots of on taxes, it’s essential to reassess the product options primarily based in your monetary targets earlier than making a choice. For my part, I like to recommend both persevering with to take a position or holding the account lively with a small contribution.
It’s essential to needless to say relying solely on this one product to achieve your long-term monetary goal isn’t a sensible selection. Subsequently, it’s advisable to incorporate it as a element 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 because of the tax benefits it affords each on the time of funding and upon maturity. Nevertheless, for individuals 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 price noting that the Sukanya Samriddhi Yojana (SSY) can also be thought of to be a superb debt instrument. Nevertheless, it isn’t advisable to solely depend on this explicit product for securing your daughter’s future. That is primarily on account of the truth that instructional inflation is rising at a price exceeding 8%. With the intention to guarantee diversification, it’s important to incorporate fairness investments alongside the SSY.
Therefore, when you began investing in SSY as a debt a part of your lady youngster’s future, then you should proceed. in case your resolution 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 purpose. Nevertheless, quite a few people disregard its goal and as an alternative put money into NPS solely to make the most of the additional tax advantages. You will need to needless to say NPS has its personal set of execs and cons as properly. (Confer 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 case you genuinely imagine that NPS is the perfect retirement product for you, then proceed with it. Nevertheless, if you’re already a subscriber to NPS and have doubts, it will 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 economic planning. Nevertheless, when you funding choices solely primarily based on tax advantages, then this will result in poor funding decisions. It’s essential to fastidiously consider every product or asset, contemplating each its benefits and downsides. Make it possible for the options align along with your monetary targets earlier than making any choices. Keep away from making hasty choices merely due to a brand new tax regime.