Post office savings schemes in India are backed by the government, with over 1.54 lakh branches nationwide. These schemes typically provide investors with a sense of security, mainly because they trust that their money is safe due to the government’s backing.
You can invest in post office schemes for various purposes, such as retirement or future needs. These schemes also provide tax benefits under Section 80C of the Income Tax Act. In this article, we will explore the savings schemes that offer tax advantages.
Post Office Savings Account:
This account operates much like a basic bank account. You can deposit a minimum of Rs. 500, and it can be opened either individually or jointly. It provides an annual interest rate of 4%.
Indian citizens and minors under 10 years old can open this account. Senior citizens enjoy tax-free interest on amounts up to Rs. 50,000. The account also offers checkbooks, ATM cards, e-banking, and mobile banking services. It’s an excellent choice for those looking for a secure, easy way to earn income with tax benefits.
5-Year Post Office Recurring Deposit (RD):
This scheme allows you to make monthly deposits for 5 years at the post office. Interest is earned on the deposited amount, with a rate of up to 6.7% per annum. The minimum investment required is Rs. 100.
After depositing for 12 months, you can obtain a loan of up to 50% of the invested amount. The investment can be withdrawn early, though it will earn a lower interest rate, and early withdrawal is possible only after 3 years.
Post Office Time Deposit (TD):
Also referred to as Post Office Fixed Deposit, this scheme lets you choose investment periods of 1 year, 2 years, 3 years, or 5 years. The minimum investment is Rs. 1,000. Fixed Deposits with a 5-year term qualify for tax benefits under Section 80C. Interest is paid annually. This scheme is ideal for those looking for a risk-free income.
Post Office Monthly Income Scheme (MIS):
This scheme requires a one-time lump sum investment. Individuals can invest up to Rs. 9 lakhs, while joint accounts can invest up to Rs. 15 lakhs.
The Post Office Monthly Income Scheme has a maturity period of 5 years and offers an interest rate of 7.4%. If you need to withdraw the funds early, you can do so after 1 year, though a penalty will apply. Investing Rs. 9 lakhs will yield a monthly income of Rs. 5,325 for 5 years.
Senior Citizens Savings Scheme (SCSS):
Tailored for senior citizens, this scheme offers an annual interest rate of 8.2%. It is available to individuals over 60 years old, including retirees. The scheme provides a reliable income and tax benefits under Section 80C, making it a suitable option for retirees looking for stable returns. The maximum investment permitted is Rs. 30 lakhs.
Public Provident Fund (PPF):
The Public Provident Fund (PPF) is a well-known long-term investment scheme with a 15-year maturity period. It currently offers an interest rate of 7.1%. You can invest a minimum of Rs. 500 and up to Rs. 1.5 lakhs per financial year. Interest earned on the PPF account is tax-free, and the scheme provides tax benefits under Section 80C. It is ideal for individuals and those saving for retirement.
Kisan Vikas Patra (KVP):
The Kisan Vikas Patra scheme is perfect for those looking to double their investment within a specific time frame. It currently offers an interest rate of 7.5%. The minimum investment is Rs. 1,000, and the investment will double in 115 months. For instance, an investment of Rs. 1 lakh will grow to Rs. 2 lakhs, and an investment of Rs. 2 lakhs will grow to Rs. 4 lakhs.
Sukanya Samriddhi Yojana (SSY):
This scheme is aimed at parents who want to save for their daughter’s education and marriage. It offers an interest rate of up to 8.2%. You can invest a minimum of Rs. 250 and up to Rs. 1.5 lakhs per financial year. The SSY provides tax benefits under Section 80C, making it a great savings option for parents.
