ICAI has suggested that an increase in the maximum PPF deposit limit is necessary because it is the only safe and tax-efficient savings scheme available for self-employed assessees
Union Budget 2022-21 Expectations: The Institute of Chartered Accountants of India (ICAI) has recommended increasing the PPF maximum annual deposit limit to Rs 3 lakh.
ICAI has suggested that an increase in the maximum PPF deposit limit is necessary because it is the only safe and tax-efficient savings scheme available for self-employed assessees. Also, the PPF maximum deposit limit has not been changed for several years. ICAI believes a raise in the PPF deposit limit would boost domestic savings as a percentage of GDP and will have an anti-inflationary impact.
In its pre-budget memorandum, ICAI noted that PPF is used as a means of savings by entrepreneurs and professionals.
“While the assessees in employment have the compulsion of saving 12% of their salary (with a matching contribution from employers), the only safe and tax-efficient option available for self-employed assessees is PPF. Hence, the suggestion to increase the ceiling of PPF contribution to Rs 3 lakhs,” ICAI said.
“This may also boost the domestic savings as a percentage of GDP and will have an anti-inflationary impact,” it added.
The present limit of Rs 1.5 lakh has not been increased for several years and requires reconsideration, ICAI said.
“The revised monetary limit will help in increasing the savings of individuals and is necessary keeping in view the rate of inflation,” it added.
Key suggestions by ICAI
- Annual limit for contribution to PPF be increased to Rs 3 lakh from the present ceiling of Rs 1.5 lakh.
- The maximum limit for deduction under SectionCCF may be increased from Rs 1.5 lakh to Rs 3 lakh.
- The quantum of deduction under Section 80C be increased from Rs 1.5 lakh to Rs 2.5 lakh to provide savings opportunities to the public at large.
Union Budget 2022-23 will be tabled in the Parliament by Finance Minister Nirmala Sitharaman on February 1, 2022.
