5 Post Office Savings Schemes to Save Tax Under Section 80C

Post Office Savings Schemes (POSS) are among the safest investments in India because they are government-backed. A few of these schemes are also tax-saving schemes under Section 80C of the Income Tax Act, 1961, and individuals can claim deductions up to Rs. 1.5 lakh per year. These schemes are ideal for individuals seeking low-risk investments with assured returns as well as tax savings.

These are five Post Office Savings Schemes that offer tax relief under Section 80C:

1. Public Provident Fund (PPF)

The Public Provident Fund (PPF) is one of the popular long-term savings instruments that yields tax-free returns. A minimum investment of Rs. 500 must be made, and the maximum one can invest within a year is Rs. 1.5 lakh. Deposits to a PPF account are eligible for tax deductions under Section 80C, up to a maximum of Rs. 1.5 lakh per annum. The interest and the total amount received at the end of maturity are also tax-free.

PPF is an Exempt-Exempt-Exempt (EEE) scheme, which implies that deposits, interest, and withdrawals are tax-free.

The interest rate on PPF for the January- March 2025 quarter is 7.1%.

2. National Savings Certificates (NSC)

The National Savings Certificate (NSC) is an investment option that provides sure returns as well as tax exemption. Investments made of up to Rs. 1.5 lakh in any year are allowed a deduction against taxes under Section 80C. The corpus needed for such investments is just Rs. 1,000 and there isn’t a specified upper limit; however, no more than Rs. 1.5 lakh is eligible under the tax concessions category.

NSC has a five-year lock-in period. The interest received is taxable, but it can be reinvested for tax advantages in the first four years.

The rate of interest on NSC for the January- March 2025 quarter is 7.7%, compounded annually and payable at maturity.

3. Sukanya Samriddhi Yojana (SSY)

Sukanya Samriddhi Yojana (SSY) is a government plan to ensure the financial security of girl children. It provides high returns and tax advantages. The invested amount is tax-exempted, with a minimum of Rs. 250 and a maximum of Rs. 1.5 lakh per annum. Investment up to Rs. 1.5 lakh is eligible for deduction under Section 80C.

Similar to PPF, SSY is also an EEE scheme, which implies that investment, interest, and maturity proceeds are all tax-free.

The interest rate on SSY for the quarter January- March 2025 is 8.2%, and it is compounded annually.

Conclusion

Post Office Savings Schemes are an excellent means of saving and enjoying tax relief under Section 80C. Post Office Schemes offer safe and stable returns, so they are the best options for those seeking to invest securely. One can increase their savings and lower their tax liability at the same time by selecting the appropriate scheme.