Post Office Saving Schemes with Income Tax benefits

Post Office Saving Schemes with Income Tax benefits

NEW DELHI: When it comes to save Income Tax (I-T) on your hard-earned money, some of the post office schemes offer attractive interest rates to the investors. The department of posts or India Post is a government-operated postal system which is part of the ministry of communications. The department has nine products in its kitty and out of which five qualifies for the tax saving option. These schemes are Post Office Time Deposit Account (TD), Senior Citizen Savings Scheme (SCSS), Public Provident Fund (PPF), National Savings Certificates (NSC) and Sukanya Samriddhi accounts. 

Under these schemes, a person can claim a deduction up to Rs 1.5 lakh in a financial year from taxable income under Section 80C of the Income Tax Act, 1961.

1) Post Office Time Deposit Account (TD): This scheme comes with four options for a maximum period of five years, which attracts the highest benefit. Investment in time deposits of one-year, two-year and three-year maturity periods fetches an interest of 7 per cent. The five-year scheme is similar to tax-saving five-year bank deposits, that comes with a lock-in period of five years. Currently, the five-year post office deposit scheme fetches 7.8 per cent. 

2) Senior Citizen Savings Scheme (For 60 years and above): The scheme offers an interest rate of 8.7 per cent per annum, payable from the date of deposit of March 31/ September 30 / December 31 in the first instance and thereafter, interest shall be payable on March 31, June 30, September 30 and December 31. Tax deducted at source (TDS) is deducted on interest, if the amount is more than Rs 10,000 per annum. 

3) 15-year Public Provident Fund Account (PPF): PPF offers an interest rate of 8 per cent per annum, which is compounded yearly. The scheme has an EEE or ‘exempt, exempt, exempt’ status and thus, the interest earned is also tax-free. The minimum amount that must be deposited in a PPF account in a financial year is Rs 500 and the maximum allowed is Rs 1.5 lakh. 

4) National Savings Certificates: The NSC fetches an interest rate of 8 per cent per annum and deposits under it also qualify for deduction under Section 80C of the Income Tax Act. This interest is compounded annually but payable at maturity. For instance, an NSC of Rs 100 will offer Rs 146.93 on maturity after five years. 

5) Sukanya Samriddhi Scheme: The Sukanya Samriddhi Scheme is a small deposit scheme for the girl child only. It currently offers 8.5 per cent interest per annum and provides income tax benefits. Even the returns are tax free under the scheme. The Sukanya Samriddhi Scheme also enjoys 'EEE' status, making it one of the most tax efficient schemes