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Ch.1 · Comparing Financial Products · easy

Which of the following correctly describes the tax treatment of PPF?

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EXPLANATION

PPF enjoys EEE tax status — contributions up to ₹1.5 lakh are deductible under Section 80C, interest accrued is tax-free, and maturity proceeds are fully exempt from tax. This makes PPF one of the most tax-efficient instruments.

A.EEE — Exempt on contribution, Exempt on interest earned, Exempt on maturity proceeds [✓ Correct]

B.EET — Exempt on contribution, Exempt on accumulation, Taxable on maturity

C.TEE — Taxable on contribution, Exempt on accumulation, Exempt on maturity

D.TET — Taxable on contribution, Exempt on accumulation, Taxable on maturity

EXPLANATION

PPF enjoys EEE tax status — contributions up to ₹1.5 lakh are deductible under Section 80C, interest accrued is tax-free, and maturity proceeds are fully exempt from tax. This makes PPF one of the most tax-efficient instruments.

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