In today’s financial landscape, individuals often seek avenues to maximise savings while optimising tax benefits. While several investment instruments offer tax-saving advantages under Section 80C of the Income Tax Act, Post Office Savings Schemes don’t fall under this category.
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Let’s delve into five such schemes provided by the Post Office that remain viable options for conservative investors despite not offering Section 80C tax-saving benefits.
These post office schemes do not come with income tax benefit
Kisan Vikas Patra
Kisan Vikas Patra (KVP) is a prominent small savings scheme within the Post Office portfolio. Presently, it boasts an annual compounding interest rate of 7.5%. KVP does not fall within the purview of deductions provided by Section 80C of the Income Tax Act. Consequently, returns from investments in Kisan Vikas Patra are subject to taxation.
Post Office Time deposits (except 5-year tenure)
Post office time deposit schemes mirror bank Fixed Deposits (FDs), providing term deposit options spanning one year to five years.
The interest rates for these deposits are as follows:
1-Year Deposit: 6.9%
2-Year Deposit: 7.0%
3-Year Deposit: 7.1%
5-Year Deposit: 7.5%
5-Year RD: 6.5%
It’s worth noting that only the 5-Year Deposit offers tax benefits, while the others do not qualify for such benefits.
Post Office Monthly Income Scheme
The Post Office Monthly Income Scheme (POMIS) is a secure and lucrative option, providing a steady income with an annual interest rate of 7.4%. Notably, investments in POMIS don’t qualify for Section 80C benefits, and TDS is not applicable.
Mahila Samaan Savings Scheme
The Mahila Samman Savings Certificate is a program aimed at encouraging women and girls to save and invest. Introduced in the Budget of 2023, it offers an annual interest rate of 7.5 percent. However, the interest earned through this scheme is subject to taxation and does not qualify for tax exemptions.
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These post office savings schemes offer income tax benefits
Public Provident Fund (PPF), 5-year post office deposit scheme, National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY), and Senior Citizen Savings Scheme (SCSS) are five post office savings schemes that provide income tax benefits.
