Is Public Provident Fund (PPF) good for last-minute tax-saving investment?

Ideally, one should make all tax-saving investments under the old tax regime at the start of the financial year.

However, a large number of taxpayers in the old regime generally wait till the last minute to make their tax-saving investments. In doing so, they often end up locking their funds in schemes that make them regret later.

For instance, many investors end up buying low-yield insurance policies in the last-minute rush to make tax-saving investments.

The last date to make tax-saving investments for FY 2024-25 is March 31, 2025.

As the deadline for making tax-saving investments for FY 2024-25 approaches, this article looks at how the Public Provident Fund (PPF) serves as a last-minute tax-saving option.

Please note that if you have switched to the new tax regime, you don't need to worry about tax-saving investments.

PPF offers guaranteed returns and is completely tax-free. might be wondering what this means. Let's understand by looking at three stages of an investment’s journey:

First, when you invest in any asset, the invested amount is not free from tax, unless it is eligible for deductions under various sections of the Income-tax Act, 1961. In the case of PPF, up to ₹1.5 lakh investment in a financial year is eligible for deduction under section 80C.

Second, the interest earned on the invested amount is often subject to tax. For instance, fixed deposits and recurring deposits. However, there is no such tax on interest earned from PPF.

Thus, PPF is free from taxes at all stages of the investment journey, making it one of the best tax-saving investment options for those filing their taxes under the old tax regime.

Is it also a good last-minute tax-saving option?

Though PPF offers a decent interest rate (7.1% currently) and one of the best tax benefits, the amount invested in this scheme gets locked in for a long period of 15 years.

Therefore, you may consider it as a good last-minute tax-saving option only if you are not worried about locking your funds for a long duration.