Postal Savings Plan: Investing in a good savings plan has always been a priority for the middle class in India, who mainly seek to invest in a policy with a high interest rate and guaranteed returns. While term deposits in banks meet this need, the interest rate and tax advantages are not as high as postal savings schemes. Small savings plans offer a higher interest rate than term deposits, and if you’re looking to invest in risk-free policies, this might be the option of choice for you.
Postal Savings Plans, backed by the government, come with interest rates ranging from 5.5% to 7.6%, depending on the plan you choose. On the other hand, fixed deposits generally have an interest rate of 5 to 6% for a period of one to 10 years. The post office schemes also come with tax benefits under Section 80C of the Income Tax Act 1961 which reduces the tax payable.
Best Post Office Schemes with High Interest and Tax Advantages
Public Provident Fund: The PPF account is a 15-year policy that offers a high interest rate of 7.1% and comes with tax advantages in which the interest earned is tax exempt. The account can also be opened in the name of a minor and contributions of Rs 500 to 1.5 lakh per annum can be deposited into a PPF account.
Sukanya Samriddhi Yojana: Intended to allocate funds to a daughter, the SSY scheme gives an interest rate of 7.6%. The account can be opened for a girl under the age of 10 and the scheme has a duration of 21 years. Investment made and interest earned under this scheme is exempt from tax under Section 80C of the Income Tax Act.
Senior Savings Plan: To enable senior citizens to obtain a fixed income after retirement, the post office has set up the Senior Citizen Savings Scheme, or SCSS. The interest rate under this scheme is 7.4 percent. The maturity period under this scheme is 5 years, but can be extended beyond that. The upper limit of this account is Rs 15 lakh and the interest earned is fully taxable. It is intended for Indians over the age of 60, with a few exceptions.
National savings certificates (NSC): This scheme is most suitable for those who wish to invest for the short term of five years and also benefit from tax advantages. While a five-year FD bank rate is typically 5.5%, NSC offers a yield of 6.8%. This postal savings plan only requires a lump sum and no monthly contribution is to be paid.
The State-supported Postal Savings Plan aims to meet the needs of those who wish to save risk-free and also wish to reduce their tax burden.
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