Know Your Tax Benefits: 5 post office schemes that provide 80C tax exemptions
Section 80C Tax Benefits: Tax saving is an important exercise for many taxpayers. In the old and the new, there are many sections which pertain to tax saving. In the old tax regime, Section 80C of the Income Tax is one such option. One can save up to Rs 1.50 lakh tax on deposits in investments options with lock-in period of three years above. Many of the post office schemes such as PPF, NSC, RD fall in the 80C tax saving category.
ITR Filing Income Tax Season: The income tax filing season is on. July 31 is the last date for filing the tax return. The income tax will be filed for the financial year gone by. But this is the time of the year, when we look as what could have been possible investment options to save a substantial amount in interest tax. Specially, people who are in the old tax regime, have many options to save tax. One of the prominent ways is to utilise the full limit of Rs 1.50 lakh of Section 80C of the Income Tax Act. There are a number of post office small savings schemes, where not only investors can get guaranteed returns but they can also get tax benefits of up to Rs 1.50 lakh under Section 80C. Here, we will describe five of those options.
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Public Provident Fund (PPF)
It is a prominent scheme among investors seeking guaranteed income in the long run. Many investors use it as a retirement scheme. The scheme provides 7.1 per cent annual compound interest rate. It has a lock-in period of 15 years, which can be extended in further blocks of five years. The minimum investment in the scheme is Rs 500, while the maximum is Rs 1,50,000 in a financial year. Deposits in PPF can be made in lump sum or in installments.
Senior Citizen Savings Scheme (SCSS)
The scheme is aimed at providing quarterly income to senior citizens. The scheme offers 8.20 per cent annual interest rate, which is joint-best among all post office schemes along with Sukanya Samridddhi Yojana (SSY). There shall be only one-time deposit in the account in multiple of Rs 1,000. The maximum investment in the scheme is Rs 30 lakh. The scheme has a five-year lock-in period and provides interest during that duration. The account can also be extended for three years. On 30 lakh investment, a senior citizen can get estimated quarterly income of Rs 61,500. It means in five years, they can get Rs 12,30,000 just as interest income.
Sukanya Samriddhi Yojana (SSY)
The investment scheme is aimed at education and marriage of a girl child. Post office offers 8.2 per cent annual interest which is compounded yearly. The minimum investment in the scheme is Rs 250, while the maximum is Rs 1,50,000 in a financial year. One can make deposits up to 15 years from the date of opening the account. The account can be closed after 21 years from the date of account opening, or at the time of marriage of girl child after attaining 18 years of age. If one utilises the full limit of Rs 1.50 lakh deposit, they can get nearly Rs 70 lakh as the maturity amount.
National Savings Certificates (NSC)
The scheme has a lock-in period of five years, where one can open an account with a minimum one-time investment of Rs 1,000 and in multiples of Rs 100. There is no maximum limit. The scheme offers 7.7 per cent interest compounded annually but payable at maturity. NSC can also be pledged or transferred as security by submitting prescribed application form at concerned Post Office supported with acceptance letter from the pledgee.
National Savings Recurring Deposit Account (RD)
The scheme is also known as post office RD, where one can make monthly deposits. The scheme offers 6.7 per cent interest per annum which is compounded quarterly. The minimum investment in the scheme is Rs 100 per month, while there is no maximum limit. If an RD account is not discontinued, one can made advance deposit up to five years in their RD account. The account can also be extended for further five years. One can also apply for loan after 12 installments have been deposited and account is continued for 1 year. The depositor can avail loan facility up to 50 per cent of the RD balance credit in the account.