InvestorQ : Would PPF (Public Provident Fund) and SCSS (Senior Citizen Saving Scheme) lose their importance after the announcement of the new tax regime under the Union Budget 2020?
krithika Saxena made post

Would PPF (Public Provident Fund) and SCSS (Senior Citizen Saving Scheme) lose their importance after the announcement of the new tax regime under the Union Budget 2020?

Answer
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7 months ago


Well, of course, saving options like PPF (Public Provident Fund) or SCSS (Senior Citizen Saving Scheme) are really helpful for taxpayers, as these options give them double benefits while saving tax on one side and increasing wealth on the other. So people prefer these options because they are less risky and give stable returns. These types of investments are generally preferred by the retirees or those near retirement.

Now, under the new tax regime, there are no deductions available which means, if you opt for the new regime, your tax saving options could not work and you will have to pay tax at flat rates.

So the question is whether these would become less attractive for the investors?

It is less likely that options like PPF, SCSS, SSY would become less attractive for the investors because the second advantage is still being the top advantage of these investments. Also, returns on these schemes are comparatively higher than those of the similar schemes but there are options that were only attractive for the purpose of saving tax while giving investors some reasonable return and after the new tax regime, it would not be really attractive to the investors such as National Savings Certificate (NSC).

Investors who want stable income might still focus on schemes like these as this could be a good option to park their money. However, one thing that investors should keep a watch at shall be the future trend in interest rates. Investors need to be sure that the interest rates provided on these schemes would still be attractive and fulfills their investment purpose. The interest rates shall be in line with the market yields.