Millions of middle-income individuals are increasingly considering post office saving schemes as a secure and risk-free option for long-term savings. Operated by over one lakh post offices across the country, these government-backed schemes offer guaranteed returns and tax benefits up to Rs 1.5 lakh under Section 80C of the Income Tax Act. In this article, we discuss five popular post office saving schemes to help you choose the best investment option according to your objectives.
Sukanya Samriddhi Yojana (SSY)
The Sukanya Samriddhi Yojana (SSY) scheme is available for girl children below the age of 10 years. Ownership is transferred to the child once she turns 18 years old or becomes an adult. The current interest rate offered on SSY accounts is 7.6 per cent. Investors can make a minimum initial deposit of Rs 250 and a maximum of Rs 1.5 lakh in a financial year. The SSY scheme offers tax exemptions under Section 80C of the Income Tax Act.
Public Provident Fund (PPF)
The Public Provident Fund (PPF) is a prominent saving scheme requiring a minimum deposit of Rs 500 and a maximum limit of Rs 1.5 lakh in a financial year. The current yearly compound interest rate is 7.1 per cent. The PPF has a maturity period of 15 years and offers a threefold tax benefit under Section 80C of the IT Act. In this scheme, the interest earned is exempted from tax, and the amount received at maturity is also not taxable.
Senior Citizen Savings Scheme (SCSS)
The Senior Citizen Savings Scheme (SCSS) is available for individuals aged 60 years or older. The SCSS has a maturity period of five years and offers an interest rate of 8 per cent per year. Notably, its five-year term is renewable upon maturity. Investments of up to Rs 15 lakh qualify for Section 80C tax benefits in this scheme.
Post Office Time Deposit Account
The Post Office Time Deposit is offered by India Post and closely resembles bank fixed deposits. The interest rates of Post Office time deposits are reviewed every three months. While the minimum investment is Rs 1,000, there is no limit to the maximum investment. However, the amount for tax benefits is capped at Rs 1.5 lakh. Investments made under the 5-year term deposit qualify for Section 80C tax benefits. The current interest rate for 5-year term deposit is 7 per cent.
National Savings Certificates (NSC)
In the National Savings Certificates (NSC) scheme, you can invest a minimum of Rs 1,000 and thereafter, in multiples of Rs 100. There is no upper limit. The NSC scheme has a maturity period of five years, and the current rate of interest is 7 per cent. The minimum age limit for investing in NSC is 10 years, and investors can claim a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act.
To summarize, post office saving schemes are becoming increasingly popular among middle-income individuals looking for secure, risk-free, long-term investment options. These government-backed schemes offer guaranteed returns and tax benefits under Section 80C of the Income Tax Act. Depending on your investment goals, age, and financial capacity, you can choose from the five schemes discussed above: Sukanya Samriddhi Yojana (SSY), Public Provident Fund (PPF), Senior Citizen Savings Scheme (SCSS), Post Office Time Deposit Account, and National Savings Certificates (NSC). Each scheme has its unique features, interest rates, and eligibility criteria, making it essential to select the one that best aligns with your investment objectives.