Does my PPF investment still enjoy tax benefits?

I have been regularly investing in the Public Provident Fund (PPF) to save taxes. With the introduction of the new tax regime, can I still claim deductions under Section 80C on my PPF investments, and what is the maximum eligible amount? - Anonymous

Yes, your PPF investments remain eligible for tax deductions—but there's an important caveat. Under the old tax regime, contributions made to the Public Provident Fund continue to enjoy tax deductions of up to Rs 1.5 lakh per financial year under Section 80C. Additionally, the interest you earn as well as the maturity amount remain fully tax-free.

However, if you choose the new tax regime, you'll lose the benefit of Section 80C deductions. This is because the new regime offers lower tax rates but removes many tax-saving deductions, including popular instruments like PPF.

The choice between old and new tax regime

Choosing between the old and new tax regimes ultimately depends on your financial circumstances, especially how much you typically claim in deductions every year.

Broadly, if your total annual deductions, such as investments in PPF, insurance premiums, home loan repayments, and so on, comfortably exceed a certain threshold, you may find the old regime more beneficial. Otherwise, the new regime's simpler structure and lower tax slabs might reduce your tax outgo.

To quickly assess and choose the most suitable option for you, use our Tax Calculator.

Also read: Does NPS Tier II offer tax benefits?

This article was originally published on March 27, 2025.