Post Office Savings Scheme: Investing in a good savings scheme has always been a priority for the middle class in India, who predominantly looks to invest in a policy with high rate of interest and guaranteed returns. While fixed deposits at banks cater to that need, the rate of interest and tax benefits are not as high as post office savings schemes. The small savings schemes provide a higher rate of interest than fixed deposits, and if you are looking to invest in risk-free policies this might be the go-to option for you.
Post office savings schemes, backed by the government, comes with interest rates ranging between 5.5 per cent to 7.6 per cent, depending upon the scheme you are choosing. On the other hand, fixed deposits typically have an interest rate of 5 to 6 per cent for a period of one to 10 years. Post office schemes also come with tax benefits under Section 80C of the Income Tax Act, 1961, reducing tax liability.
Best Post Office Schemes with High Interest Rate and Tax Benefits
Public Provident Fund: PPF account is a 15-year policy that provides a high interest rate of 7.1 per cent and comes with income tax benefits wherein the interest earned is tax free. The account can be opened under a minor’s name as well, and contributions of Rs 500 to 1.5 lakh annually can be deposited in a PPF account.
Sukanya Samriddhi Yojana: Meant for earmarking funds for a girl child, the SSY scheme gives an interest rate of 7.6 per cent. The account can be opened for a girl child under the age of 10, and the scheme has a tenure of 21 years. The investment made and the interest earned under this scheme are tax free under Section 80C of Income Tax Act.
Senior Citizens Savings Scheme: To enable senior citizens get a fixed income after retirement, the post office has in place the Senior Citizen Savings Scheme, or SCSS. The interest rate under this scheme is 7.4 per cent. The maturity period under this scheme is 5 years, but can be extended beyond that. The upper cap for this account is Rs 15 lakh and the interest earned is fully taxable. It is meant for Indians above the age of 60, barring a few exceptions.
National Savings Certificates (NSC): This scheme is the most suitable for those who want to invest for a short term of five years and also get tax benefits. While a five-year bank FD rate typically comes at 5.5 per cent interest rates, NSC gives a return of 6.8 per cent. This post office savings scheme only requires a lump sum amount and monthly contributions need not be paid.
The post office savings schemes, backed by the government, aims to cater to the needs of those who want risk-free savings and also want to reduce tax liability.
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