Post Office Savings: Not all investments made in the post office are tax free. That is, investing in those schemes does not provide the benefit of tax exemption under section 80C, even though the interest rates in them are attractive.
Post Office Small Savings: There is no fixed time to invest to save tax, rather you can plan it anytime in any financial year. This saves you from the rush of investing in the last days. When it comes to tax benefits under section 80C of Income Tax Act 1961, many people’s attention goes towards small savings scheme. Anyway, there are many people who do not want to take market risk and they look for safe options.
For this, Post Office Small Savings is a better option. But not all investments made in the post office are tax free. That is, investing in those schemes does not give the benefit of tax exemption under 80C, even though the interest rates in them are attractive and your money is also 100 percent safe. We are telling you about 5 such schemes.
Monthly Income Scheme (MIS)
Monthly Income Scheme (POMIS) included in the Post Office Small Savings Scheme gives investors an opportunity to earn monthly income. By investing a lump sum amount in MIS, you can earn income every month. Here your entire deposit will be safe and you can withdraw the entire amount after 5 years. There is a facility to open single and joint accounts in it. Many people are taking advantage of this scheme for pension after retirement. In this, the annual interest on the deposited amount is divided into 12 parts and then the 12th part can be called in the account every month.
Interest rate: 7.4% per annum
- Maturity: 5 years, then a new account can be opened for 5 years on the interest of that time
- Minimum deposit: Rs 1000
- Maximum deposit (single account): Rs 9 lakh
- Maximum deposit (joint account): Rs 15 lakh
- Tax benefit: No
Kisan Vikas Patra (KVP)
This scheme started in the name of farmers is very popular especially among the investors of rural India. In this scheme, there is a guarantee of doubling of money. Here your money doubles in 115 months i.e. 9 years and 7 months. In this, a single account and 3 adults together can open a joint account. In this, an account can be opened with a minimum of Rs 1000. There is no maximum investment limit.
- Interest rate: 7.5% per annum
- Maturity: 115 months
- Maximum deposit: No limit
- Minimum deposit: Rs 1000
- Tax benefit: No
Recurring Deposit (RD)
Post Office’s RD is a popular scheme for investors. In this, you get the facility to create a big fund for the future by depositing small amounts on a monthly basis. This scheme is also like FD but the convenience is that your money is not blocked at once. There is a facility to invest a fixed amount every month. However, it does not provide the benefit of tax exemption under Section 80C of the Income Tax Act. Rather, if the interest income from RD is more than Rs 40,000, then 10 percent TDS is deducted, while for senior citizens this limit is Rs 50,000.
- Interest rate: 6.7% per annum
- Maximum deposit: No limit
- Minimum deposit: Rs 100 monthly
- Maturity: 5 years, which can be extended for another 5 years.
- Tax benefit: No
Time Deposit (TD)
Post Office Time Deposit has deposit options for 1 year, 2 years, 3 years and 5 years. Tax benefit is available only on the 5-year scheme. This scheme is similar to bank FD in a way.
- Interest on 1 year scheme: 6.9% per annum
- Interest on 2 year scheme: 7.0% per annum
- Interest on 3 year scheme: 7.1% per annum
- Maximum deposit: No limit
- Minimum deposit: Rs 1000
Tax benefit: There is no tax benefit on 1 year, 2 year and 3 year time deposit schemes. However, the 5-year scheme which is getting 7.5% per annum interest is exempted under 80C.
Mahila Samman Savings Certificate
The government launched this scheme to provide financial security to women and girls. This is a very safe option for women investors. On this scheme, the government is offering interest equal to 5-year FD. Under this scheme, a woman can open an account on her behalf or as a guardian on behalf of a minor girl. Any account holder can deposit from Rs 1000 to Rs 2,00,000 annually in this account.
- Interest rate: 7.5% per annum
- Maturity: 2 years
- Maximum deposit: No limit
- Minimum deposit: Rs 1000
- Tax benefit: No
