Post office schemes are an excellent option for investors looking for safe and guaranteed returns. These schemes not only often offer better interest rates than bank FDs, but also assure government protection. Here, know about 5 such schemes which will give you better returns and also save income tax.
In terms of safe investment, crores of Indians trust the post office as much as they trust the bank. This trust is of generations because for years it has been getting the guarantee of the Government of India. This means that the risk of your money sinking is almost zero. Nowadays, when banks are reducing interest rates on their fixed deposits (FD), many post office schemes are not only giving more interest than them, but are also helpful in saving tax.
If you are also looking for a better option for safe investment, then know about 5 schemes of post office which can give you the benefit of better interest and can also create a big fund. Along with this, they are also helpful in saving tax. If you are also looking for an option where there is security as well as profit, then these 5 schemes can prove to be a superhit for you.
1. Public Provident Fund (PPF) – A means of creating a big fund in the long term
PPF is one of the popular savings schemes for the common man. It is best for those who want to invest for a long period and create a big retirement fund or achieve any other big goal.
Interest rate: 7.1% per annum (interest rate can change every quarter).
Investment limit: Minimum Rs 500 and maximum Rs 1.5 lakh in a year.
Maturity: 15 years, which can be extended for 5-5 years later.
Tax benefits: It gives the benefit of E-E-E (Exempt-Exempt-Exempt). Meaning, the entire amount received on investment, interest and maturity is tax free.
Why is it special
This is a great example of the power of compounding. If you invest Rs 1.5 lakh every year for 30 years, then at the rate of 7.1% your fund will become more than Rs 1.5 crore, while your total investment will be only Rs 45 lakh.
2. Sukanya Samriddhi Yojana (SSY) – A boon for daughter’s future
If you have a daughter below 10 years of age in your house, then this scheme is made for you. This is the best and safest way to save money for daughter’s education and marriage.
- Interest rate: 8.2% per annum (highest among post office schemes).
- Investment limit: Minimum Rs 250 and maximum Rs 1.5 lakh in a year.
- Maturity: After 21 years from the date of opening the account or when the daughter gets married after the age of 18.
- Tax benefits: Like PPF, it also provides the benefit of E-E-E. The amount invested also gets exemption under section 80C.
Why is it special
Its interest rates are quite good and it can create a good fund for your daughter in the long term. It also has the facility to withdraw up to 50% of the amount for the higher education of the daughter when she turns 18 years old.
3. Senior Citizen Saving Scheme (SCSS) – Regular income after retirement
This scheme is designed for senior citizens above 60 years of age, so that they can get a regular source of income after retirement.
- Interest rate: 8.2% per annum.
- Investment limit: Maximum investment can be made up to Rs 30 lakh.
- Maturity: 5 years, which can be extended for 3 years later.
- Interest payment: Interest is deposited directly into your bank account every quarter (every three months).
Why is it special
It gives a fixed and secure regular income to senior citizens. The high interest rate of 8.2% makes it much better than bank FDs. However, the interest received on it comes under the purview of tax.
4. National Savings Certificate (NSC) – Secure tax-saving scheme with a lock-in period of 5 years
This is a great option for those who want to save tax by investing a lump sum amount and also want to get a guaranteed return.
- Interest rate: 7.7% per annum.
- Investment limit: Minimum Rs 1000, there is no maximum limit.
- Maturity: 5 years.
- Tax benefits: Up to Rs 1.5 lakh invested in it is eligible for tax exemption under Section 80C.
Why is it special?
Its interest rate gets locked for 5 years, which means market fluctuations have no effect on it. The interest rate of 7.7% is better than all FDs.
5. Kisan Vikas Patra (KVP) – Money doubling guarantee
If your goal is to double your money in a certain time, then Kisan Vikas Patra is for you. It may be named after a farmer, but any Indian citizen can invest in it.
- Interest rate: 7.5% per annum (compounding).
- Investment limit: Minimum Rs 1000, no maximum limit.
- Maturity: 115 months (9 years and 7 months).
- Tax benefits: There is no tax exemption in this and the amount received on maturity is added to your income and is taxable.
Why is it special
Its biggest feature is that it guarantees to double your money. You know in advance how much time your money will double.
Frequently Asked Questions (FAQs)
1. Is the interest rate of these post office schemes always fixed?
No. The government can change the interest rates of schemes like PPF and SSY every quarter. Whereas the interest rate while investing in NSC and KVP is locked for the entire maturity period.
2. Can I invest in more than one scheme?
Yes, you can invest in many of these schemes simultaneously as per your eligibility. For example, a person can keep his PPF account and also invest in NSC.
3. Is the interest received on these schemes completely tax free?
No. Only the interest on PPF and Sukanya Samriddhi Yojana (SSY) is completely tax free. The interest received on SCSS, NSC and KVP is added to your annual income and is taxed according to your tax slab.
4. What to do if you need money before maturity?
Most schemes have the facility of premature withdrawal with some conditions, but some penalty may be levied on it.
5. Where can I open an account in these schemes?
You can open these accounts in your nearest post office. Apart from this, many big government and private banks also provide the facility of opening accounts in schemes like PPF and Sukanya Samriddhi Yojana.
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