Tax Saving on Post Office Investments

Tax Saving on Post Office Investments:-

                                                                               By CA Dhruv Anand

Fixed deposit or time deposit scheme:-

The time deposits of one-year, two-year and three-year maturity periods fetch interest at the rate of 5.5 percent. The five-year time deposit account offers a return of 6.7 percent and it qualifies for the benefit of Section 80 C of the Income Tax Act, 1961. The interest is payable annually but calculated quarterly.

Public Provident Fund scheme:-

Post office public provident fund (PPF) is a retirement planning-focused instrument. This account comes under the 'exempt, exempt, exempt' (EEE) category of tax status, which means that the returns, the maturity amount and the interest income are exempted from income tax. The scheme offers an interest rate of 7.1 percent per annum, which is compounded yearly.

National Savings Certificate:-

National Savings Certificates, or NSCs are operated by the Department of Economic Affairs. The NSC fetches an interest rate of 6.8 percent per annum. This interest is compounded annually but payable at maturity. Deposits in the National Savings Certificate qualifies for deduction under Section 80 C of the Income Tax Act.

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