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PSU Employee With Rs 194 Lacs PF: How to Reduce Tax on Interest?

T S Khurana |388 Answers |Ask -Follow

Tax Expert - Answered on Nov 22, 2024

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more

Question by C on Aug 20, 2024Hindi

Money

Good morning Mahesh sir. I am a PSU employee with 30 years exp , age 54 yrs. My present PF amount is Rs 194 Lacs , out of which my contribution including VPF is Rs 120 Lacs approx. As Govt is imposing tax on the interest above 2.5 lacs / yrly, I am paying heavily in terms of taxes. I do not have PPF. Please guide me to save the reduce the tax on this interest on PF amount.

Ans: 01. You may withdraw maximum amount (which is eligible for purchase of a house) from your PF Account & Invest the same in purchase of a house or Flat. This may reduce your tax burden on account of heavy interest on PF & gives you the leverage of appreciation of value of your purchased house.
02. You may open a PPF Account & put your future savings in that account.
Most welcome for any further clarifications. Thanks.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Good morning sir. I am a PSU employee with 30 years exp , age 54 yrs. My present PF amount is Rs 194 Lacs , out of which my contribution including VPF is Rs 120 Lacs approx. As Govt is imposing tax on the interest above 2.5 lacs / yrly, I am paying heavily in terms of taxes. I do not have PPF. Please guide me to save the reduce the tax on this interest on PF amount.

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Hi, I'm Lavan Kumar, i'm 34 year old married, one daughter of 6yr old. my current take home salary is 80k. my current PF balance as on Jan'25 is 8.5L Holding 1Cr term insurance with a premium of 18K per annum medical premium of 40k per annum for my family ( including parents). PPF Balance is 1.18L, investing around 20K per year investing in NPS from Dec'22 onwards and currently holding 2L and investing 50K every year and also investing 4500 monthly through employer from my salary( above mentioned sal is excluding this amt) Investing 9k per month in 5 mutual funds 1.Kotak infrastructure and Economic reform fund - 2k 2.Quant infrastructure fund -2k 3.Bandhan sterling value fund - 1k 4.SBI long term equity fund - 2k 5.Quant Multi Asset fund - 2k Paying LIC of 27K per year for 10L sum assured. currently holding a personal loan with an EMI of 27k per month, same will be closed by Dec'25. Please guide me on how to achieve 1Cr in next 10 years and where to invest to achieve my target.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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