Post office savings schemes: These 5 schemes do not offer tax saving benefits under section 80C

Not all post office schemes provide tax benefits under section 80C of the Income-tax Act, 1961, thus anyone trying to save money on taxes should be aware of this. Let us now take a look at each of these schemes in detail and how investments and interest earned are taxed

Getty Images

With a minimum investment of Rs. 1,500, individuals can invest up to Rs. 9 lakhs. The maximum amount for joint accounts is Rs. 15 lakhs.

Earned interest is subject to taxation and is not exempt from Section 80C of the Income Tax Act of 1961. Tax withholding (TDS) is required on interest collected over Rs 40,000, and Rs 50,000 for senior persons. An annual interest rate of 7.4% may be generated.

Getty Images

Kisan Vikas Patra is not eligible for the 80C deductions, the returns are fully taxed.

The accumulated interest is paid annually and is taxed under “income from other sources.” Withdrawals made after the plan matures, however, are not subject to tax deduction at source (TDS). Your KVP investment will double in 115 months, or 9 years and 7 months, from now. Since KVP is not eligible for the 80C deductions, the returns are fully taxed. Withdrawals made after the plan matures, however, are not subject to tax deduction at source (TDS).

Getty Images

The Government of India’s Mahila Samman Savings Certificate, 2023 is a small savings program designed specifically for women. Taxes apply to interest received under the plan. It means that you won’t get any tax benefits, in contrast to tax-saving fixed deposits. Interest income from Mahila Samman Savings Certificates is subject to taxation. Depending on each person’s tax bracket and total interest income, TDS will be subtracted.

It attempts to instill in Indian women the habit of conserving money. A resident Indian woman recipient is eligible; there is no upper age limit.

Getty Images

The time deposit account can be opened for one, two, three, or five years by depositors. On the other hand, you can extend the term of your account by formally applying to the post office. Benefits from income taxes are only offered for post office time deposits that last five years. Under Section 80C of the Income Tax Act of 1961, depositors are eligible to get income tax exemptions of up to Rs. 1.5 lakh. For other deposits such as one, two, three there are no tax benefits. Interest rates offered on 1 year, 2 year and 3 year is 6.9%, 7.0% and 7.1% respectively.

Getty Images

With a five-year lock-in period, the guaranteed return plan gives an annual interest rate of 6.7%. Each quarter, the interest rate is compounded. The account may be opened by one person or by up to three people (Joint A or Joint B). A minimum of Rs 100 or multiples of Rs 10 must be deposited into an RD account each month. The maximum deposit has no upper limit.

Getty Images