Should I repay Home Loan by withdrawing from PPF Account

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  1. mpn

    mpn New Member

    Two queries on Indian PPF Scheme

    1- if one PPF account matured and closed at end of 15 years due to need for the money.
    However Immediately succeeding next year can fresh PPF account be opened? Any restrictions?

    2- If one has ongoing housing loan of SBI/HDFC 10.15% and subsequently a PPF of 15 years matures , which is better - to withdraw maturing PPF and liquidate loan - as SBI10.15%-PPF8.7% is a saving OR is there any advice to continue the PPF and keep the loan alive at 10.15%?

    Your comments please
     
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    The Home Loan will help you claim income tax deduction for repayment of interest and principal.

    Therefore, if you are paying 10.15% interest and you are in the 30% Slab Rate, it will help you save tax of 30% of 10.15% = 3.045%. So the effective interest paid by you would be 7.105%

    And the interest earned on PPF Account is 8.7% which is tax free.

    So you are paying 7.105% on loan and earning 8.7% on PPF. Therefore, it is advisable for you to not withdraw from the PPF Account.
     
    Ketki likes this.
  3. Prabal Gaur

    Prabal Gaur New Member

    how do I download my PPF statement online, though I don't have savings account in SBI
     
  4. mpn

    mpn New Member

     
  5. mpn

    mpn New Member

    Thanks
    However reduction in total income from interest is only 2 lacs per year or
     
  6. mpn

    mpn New Member

    Reduction from taxable income is 16667 per month ( 2 lacs per annum) Therefore interest payment above this would not qualify for any tax benefit
    Typically a 20 lac house loan may have 2 lac interest per year ( assuming no principal is paid)
    Any loan over and above this would have much higher interest and no tax benefit other than 2 lac/ annum
    Your take on this is requested
     
  7. mpn

    mpn New Member

     
  8. mpn

    mpn New Member

    Also if regular 80 C investments exceed 1 lac there would be no further benefits in the scenario under discussion
     
  9. gaurav_kumar

    gaurav_kumar Well-Known Member

    The Limit of Rs. 2 Lakhs is only for Self-occupied property.

    In case of all other types of residential properties - there is not limit for claiming deduction for interest.
     
  10. noor7300

    noor7300 New Member

    Agree with Gaurav bro
     
    Last edited: Jan 16, 2015
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