5 Post Office savings schemes that you may choose to save taxes

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Updated: December 18, 2018 4:17:56 PM

To make tax-saving investments and submit the proof to your employer to minimise TDS, you may be evaluating various options to fulfill the objective.

income tax, tax-saving investments, Post Office savings schemes, Post Office tax-saving schemes, Public Provident Fund, PPF, Sukanya Samriddhi Yojana, SSY, National Savings Certificate, NSC, 5-year Post Office Time Deposit, 5-year Post Ofiice Senior Citizen Savings Schemes, SCSS, 80C benefits, tax-free interest, tax-free maturity amountThis is that time of the year when everyone looks for investment options to save tax.

This is that time of the year when everyone looks for investment options to save tax. To make tax-saving investments you may also be evaluating various options to fulfill the objective. Here are five tax-saving options you may avail through Post Office.

1. Public Provident Fund: The Public Provident Fund (PPF) is one of the most popular tax-saving options. PPF provides tax deductions on the amount invested u/s 80C up to Rs 1,50,000 in a financial year and the interest as well as the maturity amount are also tax free, which makes it an ideal tax-saving instrument of exempt, exempt, exempt (EEE) category. PPF investments are secure as it carries sovereign guarantee and are also fully protected as it can’t be attached under any order or decree of a court in respect of any debt or liability. A PPF account may be opened by any earning individual for self or his/her child for a tenure of 15 years, which may be extended for a block of five years any number of times on maturity. Loan facility is available on PPF from the third year of opening the account to the sixth year, while option of partial withdrawal is there from seventh year onwards. The newly-launched DOP eBanking facility makes the contribution and withdrawal facilities available online.

2. Sukanya Samriddhi Yojana: The government has launched the Sukanya Samriddhi Youjana (SSY) as part of its ‘Beti Padao, Beti Bachao’ or ‘save the girl child’ campaign, under which, natural or legal guardians may open an account for their girl child till she turns 10 years old. The account is opened for 21 years, in which contributions up to Rs 1,50,000 may be made in a financial year for 15 years. Partial withdrawals are allowed once the girl becomes 18 years old and the account may be closed prematurely once the girl gets married. SSY investments are also falls under EEE category and the rate of interest is even higher than the PPF. However, only one SSY account may be opened for a girl and a guardian may open accounts for maximum two girl children in normal circumstances.

3. National Savings Certificate: Investments in National Savings Certificates (NSC) are tax deductible up to Rs 1,50,000 in a financial year u/s 80C. However, the interest on NSC is taxable on accrual basis, but qualifies for deduction u/s 80C as it is deemed to be reinvested, provided that the limit of Rs 1,50,000 is not exhausted. NSC’s are issued for five years and the current rate of interest is 8 per cent.

4. 5-year Time Deposit: Post Office Time Deposits are popular among FD investors due to easy access and the sovereign guarantee. The government also keeps the interest rates at competitive level keeping its attractiveness intact. However, only the investment amount qualifies for deductions u/s 80C. The current rate of interest on the 5-year time deposit is 7.8 per cent.

5. 5-year Senior Citizen Savings Schemes: Due to higher rate of interest and security, the 5-year Senior Citizen Savings Schemes (SCSS) are very popular among the elderly. In SCSS also, only the investment amount qualifies for deductions u/s 80C. The current rate of interest on the 5-year SCSS is 8.7 per cent, the highest among all the Post Office schemes.

Apart from the above schemes, you may also approach a Post Office for investments in National Pension System (NPS) as India Post is a point of presence (POP) for the retirement scheme.

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