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Captain December 16, 2010 at 3:34 pm

Like maturity proceeds of a LIC Policy , the principal and interest amount of any PPF a/c on closure will be interest free . But any subsequent invest will attract income tax unless it is again invested in PPF , LIC , Infrastructure funds etc. which are interest free upto an certain element as per current Income Tax rules.

May I suggest that you do not close your wife’s PPF a/c and renew it for another 5 years for a good tax free income to continue. You can also make fresh deposits @ 60K annually.

Alternatively you can go for a LIC Pension Fund Please do not try ULIP which may be under tax net shortly .

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HMT December 16, 2010 at 3:34 pm

Tax treatment of PPF is Exempt-Exempt-Exempt.

You can further extend the PPF period by 5 years.

PO MIS interest is taxable.

Your wife’s income will be clubbed with your income.

HMT

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