Ours is a peculiar generation. We tend to lend our attention to things that are loud. That’s why thebillboards around us have become larger by the day. So also the horns of our city traffic. So much so that my friend, whose daughter is studying in a preschool, is getting admission calls from all up-market schools of Dimapur. Phone calls from the marketing department of so-called prestigious schools, that’s something new! I’m sure you will also be getting calls from your agents or distributors for your tax-saving investments as the financial year-end is approaching. But what about the ones which are not pushed by most agents or distributors? What about the ones that are silently waiting for your attention, between the loud and flashy ones?
So, here I am bringing you the tax-saving investments from the Government of India, readily available in your neighbourhood post offices all around the country. Through the following investments, one is eligible for a deduction of 1.5 lakhs from his/ her income under Section 80C of the Income Tax Act of 1961.
Post Office Time Deposit Account: A time deposit of five years in the Post Office will give you a handsome returnof 7.8 per cent. Deposits of up to 1.5 lakhs are eligible for tax deduction under 80C. Time deposit of one, two and three years are also available with an interest of seven per cent. But for tax deduction under 80C, you need to opt for a five-year lock-in period.
Public Provident Fund (PPF): The 15-year lock-in PPF is one of the most subscribed government backed investments in India. The best part about PPF is that its interest is tax-free. That means, apart from its eligibility of reducing your taxable income up to 1.5 lakhs under Section 80C, the interest earned from it is also tax-free. Moreover, you will get a handsome interest of eight per cent, calculated annually.
Senior Citizen Saving Scheme (SCSS): Although only senior citizens are eligible to invest up to 15 lakhs in this scheme, only 1.5 lakhs is eligible under 80C. The lock-in period is five years and can be extended by another three more years. The interest is a whooping 8.7 per cent and is payable every quarter. That means, if you invest the maximum limit of 15 lakhs, you will earn an interest of Rs. 32,625 every three months. The downside is that its interest are taxable. and if you earn an interest of more than Rs. 10,000 in a year, TDS will be deducted.
National Savings Certificate (NSC): Although there is no upper limit of investment in the National Savings Certificate, only Rs 1.5 lakhs is eligible for income tax exemption under Section 80C of 1961. The interest is calculated at eight per cent annually. Therefore, the effective interest is not 40 per cent for five years but 46.93 per cent after five years. Another beauty of this product is that the government calculates the interest and adds it to your account every year. That means the interest earned from it is also tax exempted from the first to the fourth year under Section 80C. But on the fifth year, the accumulated interest is credited into the investors account and becomes taxable income.
Sukanya Samriddhi Scheme: The Sukanya Samriddhi Scheme is a special scheme for the girl child and her future. The interest earned is 8.5 per cent per annum and is totally tax-free like PPF. One can invest upto 1.5 lakhs in this scheme in one’s daughter’s name and enjoy tax deductions under Section 80C. If you have a girl child and want to save tax, this scheme will generate the maximum benefit under 80C and also help secure the future of the child financially.
Dipankar Jakharia