Post Office Savings Scheme: When considering post office savings schemes for tax-saving purposes, it’s essential to be aware that not all schemes offer benefits under Section 80C of the Income Tax Act, 1961. Here is a breakdown of schemes without Section 80C benefits:
- Kisan Vikas Patra (KVP)
- Post Office Time Deposits (except 5-year tenure)
- Post Office Monthly Income Scheme
- Mahila Samaan Savings Scheme
- Post Office Recurring Deposits
Let’s delve into the taxation details of a couple of these schemes:
1. Mahila Samman Savings Certificate, 2023:
- This government program is aimed at encouraging Indian women to save money.
- Interest earned is taxable, and there are no Section 80C benefits.
- TDS (Tax Deducted at Source) is applicable based on the individual’s tax bracket and total interest income.
2. National Savings Time Deposit Account (TD):
- Time deposit accounts can be opened for different durations.
- Interest rates vary (6.9%, 7.0%, and 7.1% for 1 year, 2 years, and 3 years, respectively).
- Taxation applies to the interest earned, and there are no Section 80C benefits.
3. National Savings Recurring Deposit Account (RD):
- This scheme offers a guaranteed return with an annual interest rate of 6.7%.
- Interest is compounded quarterly, and there is no Section 80C benefit.
- TDS may apply based on the interest earned.
4. Kisan Vikas Patra (KVP):
- KVP returns are fully taxed, and there are no Section 80C benefits.
- Accumulated interest is taxed annually under “income from other sources.”
- Withdrawals after maturity are not subject to TDS.
5. Post Office Monthly Income Scheme:
- Individuals can invest up to Rs. 9 Lakhs, with interest earned being taxable.
- The scheme doesn’t fall under Section 80C, and TDS is applicable on interest exceeding Rs 40,000 (Rs 50,000 for senior citizens).
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