Not all post office savings schemes entail Section 80C tax benefits! Here’s what you need to know | Business

Mar14,2024



Post Office Savings Schemes: When it comes to saving tax, it is important to understand that not all post office schemes provide benefits under Section 80C of the Income Tax Act, 1961.
As per the ET report, the following schemes do not offer Section 80C benefits:
1. Kisan Vikas Patra (kvp)
2. Post Office Fixed Deposit (except 5 years tenure)
3. monthly income of post office Plan
4.Women's Equal Savings Scheme
5. Post Office Recurring Deposit

Here are each of these plans and how the investments and interest earned are taxed:

Post Office Monthly Income Scheme
Individuals can invest up to Rs. 9 lakh, minimum investment Rs. Rs 1,500, while the maximum limit for a joint account is Rs. 1.5 million.
In terms of taxation, interest earned is taxable and not eligible for benefits under Section 80C income tax act1961. Tax Deducted at Source (TDS) is applicable on interest earned above Rs 40,000 for regular citizens and Rs 50,000 for senior citizens. This scheme offers an annual interest rate of 7.4%.
Read this also Small Savings Scheme Interest Rates April-June 2024 Announced: How much will you earn by investing in Sukanya Samriddhi, PPF, NSC, Kisan Vikas Patra etc?
Kisan Vikas Patra
Kisan Vikas Patra is not eligible for 80C deduction, and its returns are fully taxable. The accumulated interest is paid annually and is taxed under “Income from other sources”. However, withdrawal after maturity is not subject to tax deducted at source (TDS).
Mahila Samman Savings Card
Mahila Samman Savings Certificate, 2023, is a small savings program of the Government of India, designed to encourage women to save money. Any resident Indian woman can participate without any maximum age limit.
Regarding taxation, the interest earned under this scheme is subject to taxes. Unlike tax-saving fixed deposits, there are no tax benefits associated with it. interest income from Mahila Samman Saving Certificate Is taxable, and Tax Deducted at Source (TDS) is deducted depending on the tax bracket of the individual and the total interest income.
National Savings Time Deposit Account (TD)
Fixed deposit accounts allow depositors to open accounts for one, two, three or five years. Additionally, depositors can extend the period by formally applying to the post office.
Interest rates vary depending on the tenure of the deposit, with rates for one, two and three years being 6.9%, 7.0% and 7.1% respectively.
In terms of taxation, only fixed deposits lasting up to five years offer income tax benefits under Section 80C of the Income Tax Act 1961. Depositors can claim tax exemption up to Rs. 1.5 lakh. However, there is no tax benefit on deposits with a tenure of one, two or three years.
National Savings Recurring Deposit Account (RD)
The guaranteed return plan offers an annual interest rate of 6.7%, compounded quarterly, with a lock-in period of five years. Individual or maximum three adults (Joint A or Joint B) can open the account. The minimum monthly deposit requirement is Rs 100 or in multiples of Rs 10, there is no maximum deposit limit.



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