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Direct Tax Code and PPF

Published On 28 Jun 2010 By . Under: PPF.   

Heard of Direct Tax Code?

Direct Tax Code was unveiled by the Government of India in 2009. Brought about to bring major tax reforms, and to fix the deficiencies in the system it was hailed as revolutionary but had its fair share of criticism as well. While the Direct Tax Code sought to do away with many of the tax deductions while increasing the tax slabs, it also at the same time sought to tax the interest from ppf account.

PPF Investment and Interest Rate

With no solid pension scheme in place yet (NPS is a lost cause as of now), most of the public in India rely on investments in ppf account for their retirement. While ppf in india gives a return rate of 8.5%, at the same time interest generated was tax free. However the direct tax code 2009 sought to change all this by taxing the interest at the time of withdrawal.

However after much debate and argument, the government has brought changes in the draft plan. Under the new changes, ppf investment wont be taxed at the time of withdrawal, thus providing a major relief for the mass public, specially the elderly, many of whom solely rely on their PPF interest rate earnings for their retirement.
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