Post Office Savings Schemes (POSS) are one of the safest investments in India, as these are backed by the government. Some of these schemes are also tax-saving schemes under Section 80C of the Income Tax Act, 1961, and individuals can claim a deduction of up to Rs 1.5 lakh per year. These schemes are ideal for individuals seeking low-risk investments and assured returns as well as tax savings.
Here are five post office savings schemes that offer tax relief under Section 80C:
Public Provident Fund
The Public Provident Fund (PPF) is one of the popular long-term savings instruments that offer tax-free returns. A minimum investment of Rs 500 is required, and a maximum of Rs 1.5 lakh can be invested within a year. Deposits in a PPF account are eligible for tax deduction under Section 80C, up to a maximum of Rs 1.5 lakh per year. The interest and the total amount received at the end of maturity are also tax-free.
PPF is an exempt-exempt-exempt (EEE) scheme, which means that deposits, interest, and withdrawals are tax-free.
The interest rate on PPF for the January-March 2025 quarter is 7.1%.
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National Savings Certificate
The National Savings Certificate (NSC) is an investment option that offers assured returns as well as tax exemption. Investments made up to Rs 1.5 lakh in any year allow a deduction against tax under Section 80C. The fund required for such investments is just Rs 1,000 and there is no specified upper limit; however, amounts exceeding Rs 1.5 lakh are not eligible under the tax exemption category.
NSC has a lock-in period of five years. The interest received is taxable but can be reinvested for tax benefits in the first four years.
The interest rate on NSC for the January-March 2025 quarter is 7.7%, compounded annually and payable on maturity.
Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana (SSY) is a government scheme to ensure the financial security of daughters. It offers high returns and tax benefits. The amount invested is tax-exempt, with a minimum of Rs 250 and a maximum of Rs 1.5 lakh per annum. Investments amount up to Rs 1.5 lakh are totally eligible for deduction under Section 80C of income tax slab.
Similar to PPF, SSY is also an EEE scheme, which means the investment, interest, and maturity proceeds are all tax-free.
The interest rate on SSY for the January-March 2025 quarter is 8.2%, and it is compounded annually.
Post office savings schemes are a great option for those who want both safe investments and tax savings. These schemes not only provide you with financial security but also make your future secure. So, if you are also looking for low-risk investments, then definitely consider these post office schemes.
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