Many post office savings schemes offer income tax benefits to investors. The small savings schemes offered by post offices provide a secure and attractive investment option for small investors.
The schemes which allow you to claim benefit under section 80C of the Income Tax Act, upto Rs. 1.5 lakh in a financial year from taxable income are:
- 5 Year Post Office Time Deposit
Post offices offer deposits/investments with maturity period of one year, three years and five years with an interest of 6.9 per cent. Five-year time deposit account offers a return of 7.7 per cent. The interest is payable annually but calculated quarterly. Under the present income tax laws, investment in income tax-saving fixed deposits (FDs) can help an individual claim deduction for investments up to Rs 1.5 lakh per annum.
- Public Provident Fund Account (PPF)
The most popular tax-saving scheme is Public Provident Fund (PPF), which comes with a maturity period of 15 years. The scheme is currently offering an interest rate of 8 per cent per annum, which is compounded yearly and subject to revise each quarter. Also, the interest earned is also tax-free. A person can open this account with Rs. 100 but has to deposit a minimum of Rs. 500 in a financial year. PPF deposits are eligible for tax deductions under Section 80C of Income Tax Act. A maximum of Rs 1.5 lakh can be claimed in one financial year.
- Senior Citizen Savings Scheme (SCSS)
An individual of the age of 60 years or more can open the Senior Citizen Savings Scheme account. The maturity period is five years and can be extended by three years. The scheme offers an interest rate of 8.6 per cent per annum.
The minimum amount required to open the SCSS account is Rs. 1,000. However, an individual cannot invest more than Rs. 15 lakh under this scheme. From this current financial year (2018-19), Section 80TTB of the Income Tax Act allows for a deduction up to ₹ 50,000 in respect of interest income from deposits held by senior citizens.
An individual of the age of 60 years or more is eligible for scheme. The scheme offers an interest rate of 8.6 per cent per annum. The minimum amount required to open the SCSS account is Rs. 1,000 and the maximum amount should not exceed Rs. 15 lakh.
- National Savings Certificate
Another post office savings scheme NSC or the National Savings Certificate has a maturity period of five years. Currently, it is offering an interest rate of 7.9 per cent per annum. This interest is compounded annually but payable at maturity. An NSC of Rs. 100 offers Rs.146.93 on maturity after five years. There is no upper limit for investment in the NSC and the minimum amount required is ₹ 100.