If you plan to opt for the old tax regime at the time of filing of income tax return (ITR) in July this year, you are entitled to claim income tax deduction. There are a number of tax-saving options which enable you to claim deduction such as those offered under section 80C of Income Tax (I-T) Act, 1961.
Here, we list out the small savings schemes, also known as post office schemes, offering income tax deduction under section 80C of I-T Act:
5 Post office schemes offering tax deductions:
I. Senior Citizen Savings Scheme (SCSS): Investors are supposed to invest a minimum of ₹1000 and not more than ₹30 lakh.
The scheme offers 8.2 percent per annum, payable from the date of deposit to March 31/Sept 30/December 31 in the first instance and thereafter, interest is payable on April 1, July 1, October 1 and January 1.
II. Public Provident Fund (PPF): This scheme offers 7.1 percent per annum interest and investors can invest anywhere between ₹ 500 to ₹1.5 lakh in a year.
III. Sukanya Samriddhi Account (SSA): This scheme attracts an investment between ₹250 to ₹1.5 lakh in a financial year. It offers an interest of 8.2 percent per annum to investors. Deposits can be made for maximum up to 15 years from the date of opening.
IV. National Savings Certificate (NSC): This scheme offers 7.7 percent per annum compounded annually but payable at maturity. Minimum investment in NSC is ₹1,000 while there is no maximum limit. The investment is matured after a five-year period.
V. Kisan vikas patra (kvp): Minimum investment is ₹1,000 while there is no maximum limit of investment. It offers an interest of 7.5 percent compounded annually.
VI. Post office 5-year Time deposit: Post office time deposit accounts are of different tenures i.e., one year, two years, three years and five years. The investment under 5-year deposit account qualifies for the benefit of section 80C of Income Tax Act, 1961. This offers 7.5 percent interest per annum which is higher than what most fixed deposit (FD) schemes offer.
Investors must be aware that no deposit can be withdrawn before the expiry of six months from the date of deposit. If term deposit account is closed after six month but before one year, PO savings account interest rate will be applicable.
Notably, maximum income tax deduction offered to taxpayers is ₹1.5 lakh per annum. Although they can invest an amount higher than this, deduction is offered only for an amount upto ₹1.5 lakh in a year.
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