Invest in post office schemes to save tax and get good returns in FY2024-25
Financial planning often revolves around tax-saving avenues coupled with promising returns. One such avenue that stands out for its reliability and effectiveness is investing in post office schemes. These schemes not only offer attractive returns but also provide tax benefits, making them a preferred choice for investors.
Post office schemes are government-backed saving instruments offered by India Post, catering to a wide range of investors with varying risk appetites and investment horizons. These schemes are known for their accessibility and simplicity, making them suitable for both urban and rural investors.
Adhil Shetty, CEO, Bankbazaar.com, says, “One of the most compelling reasons to invest in post office schemes is the tax benefits they offer. Several schemes under the purview of India Post qualify for tax deductions under various sections of the Income Tax Act, thus helping investors reduce their tax liabilities.”
Also Read: Dual advantage of National Pension System: Save tax, build retirement corpus
Here are some popular post office savings schemes and their key features for investors to understand and take a decision based on their tax saving and investment returns:
Post Office Savings Account (SB)
- 4.0% per annum on individual / joint accounts
- Minimum INR 500/- for opening
- Interest shall be credited in account at the end of each Financial Year
- U/S 80TTA of the Income Tax Act, from all Savings Bank Accounts, interest up to Rs 10,000 earned in a Financial Year is exempted from taxable Income.
5-Year Post Office Recurring Deposit Account (RD)
- Current interest rate is 6.7% per annum (quarterly compounded)
- Minimum Rs 100/- per month or any amount in multiples of Rs 10/-. No maximum limit.
- Minimum Amount for monthly deposit is Rs. 100 and above minimum in multiple of Rs. 10.
- After successfully completing 12 instalments without any defaults, you are eligible to avail a loan of up to 50% of the deposit amount available in your account.
Post Office Time Deposit Account (TD)
- Account can be opened with minimum of Rs. 1000 and in multiple of Rs. 100. No maximum limit for investment.
- Interest payable annually but calculated quarterly.
- Minimum INR 1000/- and in multiple of 100. No maximum limit.
- Account type for 1 year, 2 year, 3 year, 5 year.
- For 5 years account interest rate is applicable at 7.5%
Post Office Monthly Income Scheme Account (MIS)
- Account can be opened with minimum of Rs. 1000 and in multiple of Rs. 1000.
- Current interest rate is 7.4% per annum payable monthly.
- Maximum investment limit is INR 9 lakh in single account and INR 15 lakh in joint account
- Interest is taxable in the hand of depositor.
Senior Citizen Savings Scheme (SCSS)
- Minimum deposit shall be Rs. 1000 and in multiple of 1000, subject to maximum limit up to Rs. 30 lakh in all SCSS accounts opened by an individual.
- Current interest rate is 8.2% per annum, payable from the date of deposit to 31st March/30th Sept/ 31st December in the first instance & thereafter, interest shall be payable on 1st April, 1st July, 1st October and 1st January.
- There shall be only one deposit in the account in multiple of INR.1000/- maximum not exceeding INR 30 lakh.
- Investment under this scheme qualifies for the benefit of section 80C of Income Tax Act, 1961.
5 Year National Savings Certificate
- Interest rate is 7.7 % compounded annually but payable at maturity.
- Minimum of Rs. 1000/- and in multiples of Rs. 100/- No Maximum Limit
- Deposits qualify for deduction under section 80C of Income Tax Act.
- The deposit shall mature on completion of five years from the date of the deposit.
Investing in post office schemes not only helps individuals save taxes but also provides them with the opportunity to earn attractive returns on their investments. Whether it’s building a retirement corpus, generating regular income, or simply saving for the future, post office schemes offer a range of options to cater to diverse financial goals and objectives. Therefore, you may consider incorporating post office schemes into your investment portfolio if you like to maximise your tax saving and returns on investment.
5-Year Post Office Recurring Deposit Account (RD)
- Current interest rate is 6.7% per annum (quarterly compounded)
- Minimum Rs 100/- per month or any amount in multiples of Rs 10/-. No maximum limit.
- Minimum Amount for monthly deposit is Rs. 100 and above minimum in multiple of Rs. 10.
- After successfully completing 12 instalments without any defaults, you are eligible to avail a loan of up to 50% of the deposit amount available in your account.
Post Office Time Deposit Account (TD)
- Account can be opened with minimum of Rs. 1000 and in multiple of Rs. 100. No maximum limit for investment.
- Interest payable annually but calculated quarterly.
- Minimum INR 1000/- and in multiple of 100. No maximum limit.
- Account type for 1 year, 2 year, 3 year, 5 year.
- For 5 years account interest rate is applicable at 7.5%
Post Office Monthly Income Scheme Account (MIS)
- Account can be opened with minimum of Rs. 1000 and in multiple of Rs. 1000.
- Current interest rate is 7.4% per annum payable monthly.
- Maximum investment limit is INR 9 lakh in single account and INR 15 lakh in joint account
- Interest is taxable in the hand of depositor.
Senior Citizen Savings Scheme (SCSS)
- Minimum deposit shall be Rs. 1000 and in multiple of 1000, subject to maximum limit up to Rs. 30 lakh in all SCSS accounts opened by an individual.
- Current interest rate is 8.2% per annum, payable from the date of deposit to 31st March/30th Sept/ 31st December in the first instance & thereafter, interest shall be payable on 1st April, 1st July, 1st October and 1st January.
- There shall be only one deposit in the account in multiple of INR.1000/- maximum not exceeding INR 30 lakh.
- Investment under this scheme qualifies for the benefit of section 80C of Income Tax Act, 1961.
5 Year National Savings Certificate
- Interest rate is 7.7 % compounded annually but payable at maturity.
- Minimum of Rs. 1000/- and in multiples of Rs. 100/- No Maximum Limit
- Deposits qualify for deduction under section 80C of Income Tax Act.
- The deposit shall mature on completion of five years from the date of the deposit.
Investing in post office schemes not only helps individuals save taxes but also provides them with the opportunity to earn attractive returns on their investments. Whether it’s building a retirement corpus, generating regular income, or simply saving for the future, post office schemes offer a range of options to cater to diverse financial goals and objectives. Therefore, you may consider incorporating post office schemes into your investment portfolio if you like to maximise your tax saving and returns on investment.