Union Budget 2022: Raise PPF contribution limit from Rs 1.5 lakh to Rs 3 lakh, suggests ICAI

New Delhi: The Institute of Chartered Accountants of India has written to the Ministry of Finance regarding enhancing the annual limit for contribution to Public Provident Fund (PPF). The government is scheduled to present the Budget 2022-23 next month.

In its pre-Budget memorandum, the ICAI has made various suggestions under section 80C –one of which pertains to Public Provident Fund.

The ICAI suggested that:

a) the annual limit for contribution to PPF be increased to Rs 3 lakhs from the present ceiling of Rs 1.5 lakhs. 

b) the maximum limit for deduction under section 80CCF may be increased from Rs 1.5 lakhs to Rs 3 lakhs.

"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 matching contribution from employers), the only safe and tax efficient saving option available for self-employed assessees is PPF. Hence, the suggestion to increase the ceiling of PPF contribution to Rs 3 lakhs," said ICAI. 

ICAI said that the enhancing of PPF ceiling may also boost the domestic savings as a percentage of GDP and will have an anti-inflationary impact. 

"Further, the present limit of Rs 1,50,000 has not been increased for several years and requires reconsideration. The revised monetary limit will help in increasing the savings of individuals and is necessary keeping in, view the rate of inflation," it added.

PPF is a 15-year investment scheme under which an investor enjoys tax exemption at the time of deposit, accrual of interest and withdrawal. PPF is currently giving 7.1 percent interest. Currently, under PPF, a minimum of Rs 500 and maximum of Rs 1,50,000 can be deposited in a financial year. Deposits can be made in lump-sum or in installments.