Department of Posts offers many schemes that can help you to save your taxes. Post Office Savings Account, 5-Year Post Office Recurring Deposit Account (RD), Post Office Time Deposit Account, Post Office Monthly Income Scheme Account (MIS), Senior Citizen Savings Scheme (SCSS), 15-Year Public Provident Fund Account (PPF), National Savings Certificates (NSC), Kisan Vikas Patra (KVP) and Sukanya Samriddhi Accounts for the girl child are some of the savings schemes offered by the post office. These have the advantage of income tax benefits to investors.
Check out the list of schemes that offer income tax benefit to the investors
Public Provident Fund (PPF)
Post offices offer PPF which has the EEE (exempt-exempt-exempt) benefits under tax laws. This means that contribution, interest and maturity proceeds all are tax-free. 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.
The maturity period of PPF account is 15 years and it can be extended in a block of 5 years. Currently, PPF accounts offer an interest rate of 7.6 per cent (January-March quarter).
Senior Citizen Savings Scheme (SCSS)
This scheme is an investment option for individuals above the age of 60 years. Individuals, who are between the age of 55 and 60 years, who are retired or under VRS can invest in Senior Citizen Savings Scheme. This offers an interest rate of 8.3 per cent. One cannot invest more than Rs 15 lakh in this scheme and the maturity period is five years.
Investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, but interest earned is taxable. TDS is deducted at source on interest if the interest amount is more than Rs 10,000.
Sukanya Samriddhi Scheme
This is a small savings scheme exclusively for the girl child. A parent or legal guardian can open this account for a girl until she attains the age of ten years. Sukanya Samriddhi Scheme cab also be opened in some designated banks other than post offices.
You can contribute to the account until the completion of 15 years (earlier 14 years) from the date of opening the account. The Sukanya Samriddhi Account matures in 21 years. The annual deposit of up to Rs 1.5 lakh qualifies for tax benefit under Section 80C. This account has an interest rate of 8.1 per annum (January-March quarter).
5-Year Post Office Time Deposit
According to India Post, post offices offer deposits with tenure of one year, two years, three years and five years. If you do an investment under the five-year term plan then this qualifies for the benefit of Section 80C of the Income Tax Act, 1961.The five-year Post Office Term Deposit offers an interest rate of 7.4 per cent.
National Savings Certificates (NSC)
National Saving Certificate not only effectively puts your money to use to generate returns for you, it is a safe investment avenue that also saves taxes.
The good things about the instrument keep piling up. Unlike EPFO, under NSC there is no maximum limit for purchase. But before you rush to invest, know that investment made up to only Rs 1.5 lakh can earn tax breaks under section 80C of the I-T Act.
No tax deduction at source (TDS) is levied on NSC payouts, but subscribers must pay applicable tax on it. NSC interest rate can go up to 7.6 pct. Investment period is just 5 years.
Post Office Savings Account
Post office gives an interest of 4 per cent per annum in its savings account facility. Under Section 80TTA, interest income earned from savings accounts (including Post Office Savings Account) up to Rs 10,000 is tax deductible from the gross income.
A deduction up to Rs 10,000 is allowed under Section 80TTA of the Income Tax Act to an individual in respect of interest income from a savings account.