5 post office savings schemes that do not offer tax saving benefit under section 80C

Those looking to save taxes should note that not all post office schemes offer tax benefits under section 80C of Income-tax Act, 1961

The schemes that do not come with section 80C benefit are:

• 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

Tax-saving: 5 post office schemes with section 80C benefits

Let us now take a look at each of these schemes in detail and how investments and interest earned are taxed


Also read: Income tax deductions available under section 80C in India

1. Mahila Samman Savings Certificate
The Government of India's Mahila Samman Savings Certificate, 2023 is a small savings program designed specifically for women. It attempts to instill in Indian women the habit of conserving money. A resident Indian woman recipient is eligible; there is no upper age limit.

Taxation
Taxes apply to interest received under the plan. It means that you won't get any tax benefits, in contrast to tax-saving fixed deposits. Interest income from Mahila Samman Savings Certificates is subject to taxation. Depending on each person's tax bracket and total interest income, TDS will be subtracted.

2. National Savings Time Deposit Account (TD)
The time deposit account can be opened for one, two, three, or five years by depositors. On the other hand, you can extend the term of your account by formally applying to the post office.

Interest rates offered on 1 year, 2 year and 3 year is 6.9%, 7.0% and 7.1% respectively.

Taxation
Benefits from income taxes are only offered for post office time deposits that last five years. Under Section 80C of the Income Tax Act of 1961, depositors are eligible to get income tax exemptions of up to Rs. 1.5 lakh. For other deposits such as one, two, three there are no tax benefits.

3. National Savings Recurring Deposit Account(RD)
The guaranteed return scheme offers an annual interest rate of 6.7 per cent and has a lock-in period of five years. Interest rate is compounded quarterly. An individual or up to 3 adults (Joint A or Joint B) can open the account. An RD accountholder has to deposit a minimum of Rs 100 or in multiples of Rs 10 in a month. There is no limit on the maximum deposit.

4. Kisan Vikas Patra
Kisan Vikas Patra is not eligible for the 80C deductions, the returns are fully taxed.
The accumulated interest is paid annually and is taxed under "income from other sources." Withdrawals made after the plan matures, however, are not subject to tax deduction at source (TDS).

5. Post office Monthly Income Scheme
Individuals can invest up to Rs. 9 Lakhs, with a minimum investment of Rs. 1,500. Joint accounts have a maximum limit of Rs. 15 Lakhs.

Taxation
Interest earned is taxable, and it doesn't fall under Section 80C of the Income Tax Act, 1961. TDS to be deducted on interest earned for more than Rs 40,000 and Rs 50,000 in case of senior citizens. Interest of 7.4% can be earned per annum.