Post office saving schemes are issued and managed by the Government of India. These schemes are beneficial for both and tax-savings. If you are interested in long-term guaranteed returns, then post-office savings are ideal for you, as they carry a Sovereign Guarantee. Your hard earned money is protected and also earns interest.
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Savings Schemes In Post Office
Retirement Planning is very important and you need to make wise investment decisions. Post Office schemes help you earn compound interest and also offer tax benefits.
1. National savings certificate (NSC):
- The interest rate offered on NSC is 7.6% compounded annually and is payable at maturity.
- Minimum investment amount in the NSC is Rs 100 and in multiples of Rs 100 with no upper limit.
- The amount deposited in the NSC qualifies for deductions under Section 80C of the Income Tax Act. Interest accrued each year is deemed to be reinvested and also enjoys the Section 80C benefit.
2. Public Provident Fund (PPF):
- The interest rate on the PPF is 7.6% for the quarter April – June 2018. PPF has a lock-in of 15 years. After the expiry of 15 years, you can apply for an extension of a further 5 years.
- You can invest a maximum of Rs 1,50,000 in a Financial Year which can be invested either as a lump sum or in monthly contributions, which cannot exceed 12 in a financial year.
- You can avail a loan against PPF where the interest rate charged is 2% more than the interest rate offered by the PPF Scheme. The Principal amount repaid is credited back to your PPF account and the Interest paid on the loan goes to the Government.
- Your investment in PPF enjoys the EEE benefit. You get a tax deduction up to Rs 1.5 Lakhs a year under Section 80C of the income tax act. The Interest and the amount withdrawn at maturity are tax-free.
- To close your PPF account prematurely, you should have completed at least 5 Financial Years.
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3. Senior Citizen Saving Scheme (SCSS):
- If you are over 60 years, you can invest in SCSS. Retirees between 55-60 years, who have opted for VRS (Voluntary Retirement Scheme), can invest in SCSS.
- NRIs and HUFs are not allowed to invest in the SCSS.
- SCSS keeps your money safe and also offers quarterly interest payouts. An SCSS account in your post office will fetch an interest of 8.3% a year.
- You can invest a maximum of Rs 15 Lakhs either individually or jointly in the SCSS.
- Your investment in SCSS enjoys a tax deduction up to Rs 1.5 Lakhs a year under Section 80C.
What is Post Office Monthly Income Scheme (POMIS)?
- POMIS (Post Office Monthly Income Scheme) keeps your money safe and you earn interest on the investment.
- POMIS has a lock-in of 5 years and you can withdraw the money you have invested when the scheme matures.
- You earn interest of 7.3% a year on your POMIS Account. You can collect monthly interest from the post office or have the money directly transferred to your bank account.
- You can reinvest the corpus you get from POMIS, for another 5 years and enjoy double benefits.
Kisan Vikas Patra (KVP):
- Kisan Vikas Patra savings certificate scheme can be availed from the nearest post office.
- A one-time investment made in the KVP doubles in around 9 years and 10 months. KVP has a maturity period of 118 months.
- You can invest a minimum of Rs 1,000 with no upper limit.
- If you are above 18 years, you can invest in the KVP.
- HUFs and NRIs cannot invest in the Kisan Vikas Patra.
- KVP currently offers an interest of 7.3% which is compounded yearly.
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