Post office schemes, PPF interest rate, calculator: Your perfect guide for risk free investments

Post office schemes, PPF interest rate, calculator: Tax saving has always been a major goal of a salaried individual. An individual under taxable range keeps struggling to juggle between his or her income and various tax saving schemes. 

This happens mostly because many people don't have a perfect investment plan which makes a heavy dent on their salaries or income. 

Also, there are numerous options available in the current scenario for people in the market. Multiple tax saving schemes are available like National Pension System (NPS), ELSS mutual funds, post office schemes, SIPs which further create tension in the minds of the people. 

Although, these investment schemes are very popular, but many of these tools attach a tag of high-risk investments as many of these investment schemes are volatile in the equity segment. Many investors refrain from parking their funds in securities due to this volatility as there is a possibility that an investor may witness depreciation in the value of their investment. 
  
For the risk-averse individuals, we offer you a perfect guide as there are many other tax saving tools that promise assured returns while your parked investment remains safe till maturity. While staying away from the securities, an individual can save upto Rs 1.50 lakh per annum under Section 80C.

Here's a brief guide to popular tax saving tools with a promising return 

Public Provident Fund (PPF)

If there has been one investment scheme that has continued to rule for decades is the Public Provident Fund (PPF). The craze for this investment scheme has not waned over the years. It's a risk free investment scheme with promising returns due to its compounding power. 

The scheme is backed by the central government and offers high risk-free returns. PPF account can be opened in a bank or in post office. Although, those planning to invest in the scheme should keep one think in mind that the scheme comes with an initial lock-in period of 15 years. PPF falls under the Exempt-Exempt-Exempt (EEE) category. 

EEE category means that your investment qualifies for a deduction, the interest earned during the accumulation is also exempted while the income you generate from the investment would not be taxable at the time of maturity.  There is an option to extend the tenure of the account in a block of five years after the 15 years maturity. 

Public Provident Fund (PPF) calculator 

The interest rate on PPF is 7.1 per cent per annum.

Investment: Rs 1,50,000 per annum 

Time period: 15 years

Interest: 7.1%

Maturity value: Rs 40,68,209

Total interest: Rs 18,18,209

Invested amount: Rs 22,50,000

Fixed deposit

A perfect risk free saving option, however, low interest rates have discouraged people to opt for FDs for the years when better options are available in the market. Any person can start a tax-saving fixed deposit account in any bank or post office and claim a deduction in the income tax. 

National Savings Certificates

National Savings Certificates (NSC) promises assured returns and is a promising risk-free option for individuals. One plus point of the scheme is that there is no age limit to purchase NSC. The deposits qualify for deduction under section 80C of Income Tax Act.

As per the rules, investments in NSC cannot be withdrawn before the maturity period. The NSC comes with a maturity period of 5 years. Any number of accounts can be opened under the scheme. NSC may be pledged or transferred as security, by submitting prescribed application form at concerned Post Office supported with acceptance letter from the pledgee. NSC continues to offer 6.8 per cent compounded annually.

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Senior Citizens Savings Scheme Account (SCSS)

One of the most preferred options for retirees (above the age of 60 years). The lock-in period is 5 years which can be extended for another 3 years at the time of maturity. The maximum investment limit in this scheme is Rs 15 lakh. The principal amount is eligible for a tax deduction of up to Rs. 1.5 lakh per annum under section 80C of the Income Tax Act, 1961. However, interest is subject to tax as per the individual tax slab.

The interest rate on Senior Citizen Savings Scheme is 7.4 per cent per annum.

Senior Citizens Savings Scheme Account (SCSS) calculator

Principal account: Rs 15,00,000

Number of years: 5

Interest rate: 7.4 per cent per annum

Maturity Amount: Rs 15,00,000

Quarterly Interest: Rs 27,750

Total Interest earned in 5 years: Rs 5,55,000

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