Post Office Savings Scheme: Top 3 post office schemes with income tax benefits for you
Post Office Savings Scheme: If you are seeking safe investment options that will help you earn a decent return, post office schemes are the right investment plans for you. The schemes are well known among investors in both urban and rural parts of the country. India Post offers many schemes such as 5-Year Post Office Recurring Deposit Account (RD), Post Office Saving Accounts, Post Office Time Deposit Account and National Savings Certificates (NSC), among others. Many of these schemes also offer income tax benefits to investors.
Here are top 3 post office schemes which offer income tax benefits:
– Public Provident Fund (PPF):
Probably the most popular tax-saving scheme, Public Provident Fund (PPF) provides EEE (exempt-exempt-exempt) benefits under the income-tax laws. It means, the contribution by the investors, interest rate and maturity are all 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 accounts is 15 years which can be later extended in multiples of five after the account matures. The return rate is 7.6 per cent. Under the PPF account, there is loan facility and partial withdrawal facilities too. Also, the facility for premature closure of the account is also available after completion of five years. However, the option is available only under specific conditions. The interest rate is revised quarterly.
– 5-Year Post Office Time Deposit:
According to the India Post website, post offices offer deposits in the time period of one year, three years and five years. The investment under the five-year term deposit is eligible for the benefit of Section 80C of the I-T Act. Under this scheme, customers get an interest rate of 7.4 per cent. 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.