You might have heard people discussing several post office saving schemes. Ever wondered why? It is because these schemes facilitate long-term savings and offer risk-free investment returns. Because of such reasons, millions of middle-income individuals opt for these schemes over other investment options. These are operated by over one lakh post offices spread all over the country. The biggest plus point of the post office saving schemes is that they are government-backed and thus, provide guaranteed returns.
Furthermore, these schemes also offer tax benefits up to Rs 1.5 lakh under Section 80C of the Income Tax Act. Let us take a look at five post office saving schemes and you can select the one that suits your investment objectives in the best way.
Sukanya Samriddhi Yojana (SSY)
You can avail the Sukanya Samriddhi Yojana scheme by opening an account in the name of a girl child who is below 10 years old. The girl can take ownership of the account once she turns 18 years old or becomes an adult. The current interest rate being offered on Sukanya Samriddhi account is 7.6 per cent. A minimum initial deposit of Rs 250 and a maximum of Rs 1.5 lakh can be made in a financial year. The Sukanya Samriddhi Yojana offers tax exemption under Section 80C of the Income Tax Act.
Public Provident Fund (PPF)
A Public Provident Fund (PPF) is one of the most prominent saving schemes. While the minimum amount that must be deposited in a PPF account in a financial year is Rs 500, the maximum limit is Rs 1.5 lakh in a single financial year. The current yearly compound interest rate offered by PPF is 7.1 per cent. PPF, which has a maturity period of 15 years, offers a threefold tax benefit in accordance with Section 80C of the IT Act. In this scheme, the interest earned is exempted from tax, and the amount received at maturity is also not taxable.
Senior Citizen Savings Scheme (SCSS)
You can open a Senior Citizen Savings Scheme account if you are of the age of 60 years or more. The SCSS has a maturity period of five years and offers an interest rate of 8 per cent per year. It is worth noting that its five-year term is renewable once it reaches maturity. Investment of up to Rs 15 lakh qualifies for Section 80C tax benefits in this scheme.
Post Office Time Deposit Account
The Post Office Time Deposit is offered by India Post and is very similar to bank fixed deposits. The interest rates of Post Office time deposits are reviewed every three months. The plus point of this scheme is that while the minimum investment is Rs 1,000, there is no limit to the maximum investment. However, the amount for tax benefits is Rs 1.5 lakh. Investment made under the 5-year term deposit qualifies for Section 80C tax benefits. The current interest rate for 5-year term deposit is 7 per cent.
National Savings Certificates (NSC)
You can invest a minimum of Rs 1,000, and thereafter, in multiples of Rs 100 in the NSC scheme. There is no upper limit. The NSC scheme has a maturity period of five years and the current rate of interest is 7 per cent. The minimum age limit is 10 years and one can claim a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act.
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