India post is the postal network in India, it offers various types of saving scheme to the investors. Investment in these schemes also offers some tax benefits to the investors such as deductions under section 80C of the Income Tax Act, 1961. Currently, investors can claims deductions up to 1.50 lakhs under the Income-tax Act,1961 by investing in these schemes.
The interest given under these schemes are equal to the government’s interest rate in small saving schemes. These interest rates are revised on a quarterly basis.
Here are some of the post offices saving schemes that can be used to get tax benefits.
Fixed deposit or time deposit scheme
In post office Fixed deposit or time deposit scheme, Investor can deposit the lump sum amount for a specific period and can avail guaranteed returns and interest payout at his choice. These schemes comes with a maturity period of one year, two years and three years which can give interest at the rate of 5.5%.
Also, there is scheme with a maturity of 5 years which can offers return of 6.7 percent and also qualifies for deduction under income tax Act,1961.
Public Provident Fund scheme
Public Provident Fund or PPF is a retirement-focused saving scheme of Post office. This scheme is considered as “EEE” i.e. exempt, exempt, exempt category from the point of view of tax. This means under scheme Return, maturity value and Interest are fully exempt from tax. This scheme offers interest @ 7.1 % p.a. which is compounded annually. Investments under this scheme qualify for deduction under section 80C of the Income-tax Act,1961.
National Savings Certificate
National Saving Certificates are investment schemes offered by the Post office. This are operated by the Dept. of Economic Affairs. These certificates offers an interest rate of 6.8 percent per annum. Interest under this scheme is compounded on an annual basis but is paid at maturity. Deposit or investment under NSC are eligible for deduction under section 80C of the Income Tax Act,1961.
Senior Citizen Savings Scheme
As the name of the scheme suggests this scheme is framed for the benefits of senior citizens. This scheme helps in generating wealth for senior citizens. Under this scheme person who is of age 60 years or more can avail benefits of the scheme.
This scheme offers an interest rate of 7.4 % per annum. Interest is payable from the date of deposit to 31st march/30th september/31st December on the first instance and thereafter, interest are payable on quarterly on 31st March, 30th June, 30th Sept., and 31st December. This scheme is eligible for deduction under section 80C of the Income Tax Act,1961.