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Top 5 Post Office Schemes With Section 80C Tax Benefits

Updated: May 22


Top 5 Post Office Schemes With Section 80C Tax Benefits

Are you looking for post office schemes for tax benefits? Well, you are in luck! Whether you are a novice investor or experienced in financial planning, there's something for everyone on the list mentioned in this blog. So, if you are ready to maximise your savings and explore some lucrative investment options, keep reading!

This blog post goes through the top 5 post office schemes under 80C  in India that can help you save money and lower your tax bill. Let's dive in and discover how these post office schemes can work wonders for your tax planning.

 

Table of Content

 

What Are Post Office Schemes?

Post Office Schemes refer to a set of financial savings and investment instruments offered by the postal department in India. These schemes are designed to cater to the diverse financial needs of individuals, providing options for savings, long-term investments, and retirement planning. Managed by India Post, the country's postal system, these schemes are known for their accessibility, reliability, and often come with attractive interest rates.


Individuals can invest in various post office schemes based on their financial goals and preferences. Some popular post office schemes include  National Savings Certificates (NSC), Post Office Recurring Deposits, Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and the Senior Citizen Savings Scheme (SCSS). Each scheme has its own features, tenure, and benefits, ranging from tax exemptions to competitive interest rates.


Investors can visit their local post offices to open accounts or make investments in these schemes. The ease of access, coupled with the trust associated with government-backed initiatives, makes post office schemes a preferred choice for many individuals in India seeking secure and structured financial instruments.


5 Best Post Office Schemes Providing Section 80C Tax Benefits

These programs not only offer competitive interest rates, but they also give tax benefits. So, let's look at the top 5 savings choices provided by post offices in India.


National Savings Certificates

The National Savings Certificates (NSC) are first on the list for good reason. This plan is popular among investors who want to save for the long term. NSC provides a yearly compounded fixed interest rate. There is no upper limit for investing in NSC. However, you need a minimum of ₹ 1,000 to begin this plan.

It has a 5-year maturity duration, making it a dependable and secure investment alternative. Furthermore, the interest received on NSC is tax deductible under section 80C of the Income Tax Act 1961.


Post Office Recurring Deposits (PORD)

The Post Office Recurring Deposits (PORD) are up next. If you want a savings plan that allows you to contribute a set amount each month, PORD is an excellent choice. This plan provides a set interest rate that is compounded quarterly. The minimum deposit needed to start a PORD account is relatively low. This plan runs for 5 years.

These features make it accessible to a broad spectrum of investors. The tax on interest earned on a recurring deposit comes under tax exemption under 80c up to ₹ 1,50,000. However, no TDS applies to it.


Public Provident Fund (PPF)

Moving on, the  Public Provident Fund (PPF) is one of India's most popular savings programmes. Why so? PPF gives favourable interest rates and the option to contribute whatever amount between the government's minimum and maximum limitations. And this programme is ideal for long-term investments as it has a 15-year maturity period.

However, you can withdraw the premium after the 7th financial year. Furthermore, both the interest and the maturity amount are tax-free. And last but not least, along with being a tax-efficient investment alternative, PPF is also risk-free!


Sukanya Samriddhi Yojana (SSY)

If you're seeking a savings plan that is mainly developed for the welfare of girls, the Sukanya Samriddhi Yojana (SSY) is for you. This programme strives to provide a bright future for a girl child by providing a competitive interest rate and tax benefits. The minimum deposit necessary to start an SSY account is relatively cheap, only ₹ 250 annually.

The programme has a 21-year lock-in term or until the female marries, whichever comes first. And you must start investing in SSY before your girl child turns 10. The interest and maturity amounts are tax-free, making SSY an excellent post office scheme for tax benefits for parents.


Senior Citizen Savings Scheme (SCSS)

Finally, there is the Senior Citizen Savings Scheme (SCSS). This programme is only available to older persons, as the name implies. SCSS provides a greater interest rate than other savings plans and a 5-year maturity period that can be extended once for an extra 3 years. 

You can invest in SCSS if you are above the age of 60. And if you’ve opted for voluntary retirement, you can start at 55. Senior citizen savings scheme provides tax advantages under section 80C up to ₹ 1,50,000. This makes it an excellent choice for older citizens seeking regular income and tax savings.

That’s it for now! The post office schemes under 80c listed above offer competitive interest rates and tax advantages. These programmes provide various alternatives to meet multiple financial objectives. The post office has you covered whether you are searching for long-term savings, monthly donations, or for the welfare of your loved ones.

So, Leverage these savings schemes and ensure your financial future. Congratulations on your investment!


FAQs


Q1. What is Section 80C?

Section 80C  refers to a section of the Income Tax Act in India that provides individuals with opportunities to reduce their taxable income by claiming deductions for certain specified investments and expenses. Under Section 80C, taxpayers can claim deductions for various investments and expenditures, up to a maximum limit of ₹1,50,000.

Q2. How do National Savings Certificates (NSC) work, and what is the minimum investment required to start an NSC plan?

National Savings Certificates (NSC) offer a fixed interest rate with a 5-year maturity. The minimum investment to start an NSC plan is ₹1,000.

Q3. What is the tenure of the Post Office Recurring Deposits, and is there any tax deducted at source (TDS) on the interest earned?

Post Office Recurring Deposits has a 5-year tenure, and there is no TDS on the interest earned. The interest is tax-exempt under section 80C, up to ₹1,50,000.

Q4. Can you provide details on the maturity period and tax benefits of the Public Provident Fund (PPF)?

PPF has a 15-year maturity period, and both the interest and maturity amounts are tax-free under section 80C.

Q5. What is the minimum deposit requirement for starting a Sukanya Samriddhi Yojana (SSY) account, and what is the lock-in period for this scheme?

The minimum deposit for SSY is ₹250 annually. The scheme has a lock-in period of 21 years or until the girl child gets married, whichever comes first.

Q6. Who is eligible to invest in the Senior Citizen Savings Scheme (SCSS), and what are the age criteria for this scheme?

SCSS is available for individuals above the age of 60. Those who have opted for voluntary retirement can start at the age of 55.

Q7. Can investments in post office schemes be made online, or is it necessary to visit a physical post office?

Currently, many post office schemes allow online investments through the official portal. However, it's advisable to check with the specific post office for the most accurate and up-to-date information.

Q8. Are the interest rates on post office schemes fixed, or do they vary over time?

The interest rates on post office schemes are subject to change and may vary based on government regulations. It's recommended to check the latest rates before making any investment decisions.

Q9. Is there a penalty for premature withdrawal of funds from post office schemes?

Premature withdrawal penalties may apply to certain post office schemes. It's important to review the terms and conditions of each scheme to understand any penalties associated with early withdrawals.

Q10. Can NRIs (Non-Resident Indians) invest in these post office schemes, and are they eligible for the same tax benefits?

Generally, post office schemes are designed for Indian residents. NRIs should check specific eligibility criteria and tax implications before investing.

Q11. How is the interest on post office schemes taxed, and is it considered a part of the investor's annual income?

The tax treatment of interest on post office schemes varies. Some schemes offer tax benefits on the interest earned, while others may be taxable. Investors should be aware of the tax implications and consult with a financial advisor if needed.

Q12. Can the investments in post office schemes be used as collateral for loans or other financial transactions?

Depending on the specific scheme, some post office investments may be eligible as collateral for loans. Investors should check the terms and conditions of each scheme and consult with financial institutions for further details.


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