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Earn more and save income tax under these post office saving schemes 

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India Post, which runs the postal network in the country, offers nine types of saving schemes. Investment in some of these schemes also qualifies for income tax benefits under Section 80C of the Income Tax Act. Using these schemes, investors can claim a deduction up to Rs 1.5 lakh in a financial year from taxable income.

Interest rates on these post office saving schemes move in line with the government’s interest rates on small savings schemes, which are revised on a quarterly basis.

Here are the post office saving schemes that offer income tax benefits:

Fixed deposit or time deposit scheme

In a post office time deposit (TD) scheme, one can deposit a lump sum of money for a specific period and avail of features like guaranteed returns and choice of interest payout. The time deposits of one-year, two-year and three-year maturity periods fetch interest at the rate of 5.5 percent.

The five-year time deposit account offers a return of 6.7 percent and it qualifies for the benefit of Section 80C of the Income Tax Act, 1961. The interest is payable annually but calculated quarterly.

Public Provident Fund scheme

Post office public provident fund (PPF) is a retirement planning-focused instrument. This account comes under the ‘exempt, exempt, exempt’ (EEE) category of tax status, meaning the returns, the maturity amount and the interest income are exempt from income tax. The scheme offers an interest rate of 7.1 percent per annum, which is compounded yearly.

 

National Savings Certificate

National Savings Certificates, or NSCs are operated by the Department of Economic Affairs. The NSC fetches an interest rate of 6.8 percent per annum. This interest is compounded annually but payable at maturity. Deposits in the National Savings Certificate qualifies for deduction under Section 80C of the Income Tax Act.

Senior Citizen Savings Scheme

Senior Citizen Savings Scheme (SCSS) serves as an investment avenue and helps in generating wealth for a successful retirement life. A person of the age of 60 years or more is eligible for the scheme.

The scheme offers an interest rate of 7.4 percent per annum, which is payable from the date of deposit on March 31/September 30/December 31 in the first instance and thereafter, interest are payable on March 31, June 30, September 30 and December 31. Investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, 1961.

Source : http://www.cainindia.org/

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