Here Are 4 Post Office Saving Schemes That Offer Income Tax Benefits

India Post or Department of Posts, which operates a network of more than 1.5 lakh post offices in the country, offers a total of nine saving schemes with different interest rates. Some of these post office saving schemes qualify for income tax benefits. Using these products, an investor can claim a deduction up to Rs 1.5 lakh in a financial year from taxable income under Section 80C of the Income Tax Act. Interest rates on these post office saving schemes move in line with the government's interest rates on small savings schemes, which are revised on a quarterly basis. (Also read: How Much Income Tax You Can Save In Assessment Year 2020-21)

Here are 4 post office saving schemes that offer income tax benefits:

Post office Fixed Deposit (FD) scheme:

In a post office fixed deposit (FD), one can deposit a lump sum of money for a specific period and avail of features like guaranteed returns and choice of interest payout. Post office fixed deposit (FD) account, also known as office time deposit (TD) account, offers interest rates across four maturities: one year, two years, three years, and five years, according to India Post official website- indiapost.gov.in. Interest is payable annually but is calculated quarterly. The following FD interest rates are applicable on deposits:

The investment under 5 years fixed deposit qualifies for the benefit of Section 80C of the Income Tax Act, 1961, mentioned India Post.

(Also read: All You Need To Know About Income Tax Benefit Under Section 80C)

Post office Public Provident Fund (PPF) account

Post office public provident fund (PPF) is a retirement planning-focused instrument. The post office PPF account comes under the 'exempt, exempt, exempt' (EEE) category of tax status, meaning the returns, the maturity amount and the interest income are exempt from income tax. The post office PPF account offers an interest rate of 8 per cent per annum, compounded on a yearly basis, according to the India Post website.

Post office Senior Citizens Savings Scheme (SCSS)

Senior citizen savings scheme (SCSS), one of the post office saving schemes, serves as an investment avenue and helps in generating wealth for a successful retirement life. Post office senior citizen savings scheme has a maturity period of 5 years, which can be extended for further three years within one year of the maturity by giving application in prescribed format. Post office SCSS earns an interest rate of 8.7 per cent per annum, which is payable from the date of deposit on March 31/ September 30/December 31 in the first instance and thereafter, interest are payable on March 31, June 30, September 30 and December 31. Investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, 1961, according to India Post's official website.

Post office National Savings Certificates (NSCs)

National savings certificates or NSCs, one of the post office saving scheme, is operated by the Department of Economic Affairs. For the quarter ending March 31, post office NSCs fetches an interest rate of 8 per cent per annum, as mentioned on the official website of India Post. This interest is compounded on an annual basis but paid on maturity. Deposits in the National Savings Certificate qualify for deduction under Section 80C of the Income Tax Act.